SEBI’s Historic Rs 300 Crore ‘Pump and Dump’ Scam Busted

A major win for market integrity! SEBI, India’s capital market regulator, just pulled off its biggest raid ever, busting a massive ₹300 crore ‘pump and dump’ scam. Simultaneous operations in Ahmedabad, Mumbai, and Gurugram uncovered a web of deception involving shell companies and even Telegram channels.

On Wednesday, June 19th, SEBI swooped in, seizing crucial documents, rubber stamps, and other records. This wasn’t just any regular action; SEBI rarely uses its search and seizure powers, making this crackdown truly significant, especially given the huge amount of money involved.

So, what happened? Around 15-20 shell companies, set up by promoters of certain listed firms, were at the heart of this scam. These companies, registered as “proprietary traders,” were used to manipulate share prices, particularly of two agro-tech companies.

SEBI found that one company’s stock, for instance, shot up from just ₹1 to ₹40 in less than a year, only to crash back to ₹2-3. This happened without any real change in the company’s business – a classic sign of manipulation, leaving small investors high and dry.

What’s a ‘pump and dump’? It’s simple: fraudsters artificially inflate a stock’s price, often through their own entities. Once the price is high and new investors jump in, they ‘dump’ their shares, making huge profits while unsuspecting retail investors lose big.

SEBI is also checking if certain Telegram channels, run by unregistered analysts, were used to promote these manipulated stocks, trying to connect the dots in this vast conspiracy.