SEC mechanism to report social media wrongdoings

The Securities and Exchange Commission (SEC) has taken strong action in response to the increasing impact of social media on financial markets.

Last year, the capital market regulator tackled 30 incidents involving social media, prompting the establishment of a mechanism to report suspected wrongdoing through its official webpage, Tushara Jayaratne, SEC's Deputy Director General told the Business Times.

Demonstrating its commitment to investor protection and market integrity, the SEC launched a user-friendly and confidential channel on its website for individuals to report suspicious activities observed on social media platforms. This streamlined process not only enhances investor protection but also strengthens the integrity of the securities market by fostering greater collaboration with the public. It empowers investors, market participants, and concerned citizens to be active contributors in the fight against fraudulent activities, Mr. Jayaratne said.

Last May, an 18-year-old, despite being warned continued to give investment advice on Twitter. As a result, the individual was banned from joining the industry for the next five years. This serves as a warning to anyone seeking to manipulate or deceive investors through social media platforms, analysts observed.

Recognising that not everyone has convenient Internet access, the SEC also encourages individuals to report social media wrongdoings through traditional methods such as post or fax. This inclusivity ensures that all individuals can share information and contribute to maintaining the integrity of the securities market, Mr. Jayaratne said.

“This reporting mechanism is a significant move towards safeguarding investors and preserving market integrity in the face of evolving communication channels.”

By establishing a direct reporting channel, the SEC aims to strengthen collaboration with the public, including investors, market participants, and concerned citizens, in jointly upholding the integrity of the capital market.