Digital Deception: A Role of Social Media in Insider Trading and Market Manipulation

The rise of social media platforms has significantly altered the dynamics of financial markets, presenting new challenges for market oversight. In India, the intersection of social media and stock trading has brought to light concerns regarding the use of insider trading tactics. This paper investigates how social media—through the spread of unverified rumors, speculative commentary, and targeted influence—can be leveraged to manipulate markets. It reviews India’s legal framework addressing insider trading, assesses the current regulatory responses, and identifies the difficulties posed by the rapid dissemination of information online. By analyzing case studies and recent events where social media influenced market behavior, the study highlights the critical need for flexible regulatory approaches. The results indicate that while social media fosters greater access to information, it also demands stronger tools to detect and prevent market manipulation, ensuring the integrity and transparency of financial markets in the digital era.