Sebi Unveils Pump-and-Dump Scheme Tactics Involving 82 Stocks, Exposing Modus Operandi Behind Alleged Market Manipulation.
The Securities and Exchange Board of India (Sebi) has issued an interim order uncovering a significant stock manipulation operation that leveraged social media platforms to artificially inflate the prices of select SME stocks. The investigation revealed that the accused practiced a classic pump-and-dump strategy, accumulating shares at lower prices before disseminating false bullish narratives through platforms such as Telegram, WhatsApp, and X. This deceptive practice attracted unsuspecting retail investors, allowing the perpetrators to offload shares at inflated prices amidst the growing momentum generated by aggressive promotional messaging. Consequently, the order barred seven individuals from accessing capital markets and also froze Rs 20.25 crore in purportedly unlawful gains made during this scheme.
The investigation, which covered 82 stocks over a defined period, highlighted specific instances of coordinated fraudulent activities. Particularly concerning was the case involving Afcom Holdings, where social media influencer Aniket Gupta utilized various channels to disseminate overly optimistic projections regarding the company’s earnings. The careful orchestration of these communications, which included direct instructions to amplify messages amongst larger groups, indicates a calculated effort to mislead investors while simultaneously profiting from their enthusiasm. An analysis of trading records revealed that members of the Gupta family sold substantial quantities of Afcom shares during the promotional periods, raising serious questions about the transparency and ethics of their actions.
Sebi’s findings underscore the significant role social media plays in modern stock market manipulation, especially concerning SME stocks with less regulatory oversight. The regulator expressed concern that campaigns including unrealistic price targets and guaranteed returns could mislead investors and violate regulations governing fair trading practices. This case serves as a critical reminder of the need for heightened scrutiny and vigilance, particularly in the rapidly evolving landscape of retail investing facilitated by social media channels. As regulators aim to protect retail investors from potential manipulation, this order highlights the imperative for compliance and ethical standards within the securities market.
Source: The Economic Times
(Expert Note: This report was prepared by the Wealthova team.)