Sebi plans to delist firms with no economic activity and deploy AI-based surveillance to protect penny stock investors

Key facts

• The Securities and Exchange Board of India (Sebi) is working to delist companies with no economic activity from stock exchanges to protect investors, particularly penny stock investors, as these firms pose a potential danger and could enable market manipulation.
• Sebi chairman Tuhin Kanta Pandey announced the delisting efforts on Saturday in Kolkata.
• Pandey said such companies are used in pump and dump operations by manipulators and their continued listing could expose investors to risks through social media groups.
• Sebi is planning to use an artificial intelligence-based system to monitor companies with minimal economic activity and generate faster alerts, and is already using AI techniques to track and scrutinise such accounts.
• Penny stocks are typically priced below Rs 10 or Rs 20, attracting investors with limited stock market knowledge who risk losing money when prices correct.