Explained! Modus operandi and how Sebi cracked whip in alleged pump-and-dump scheme involving 82 stocks

Sebi has uncovered an organized stock manipulation network that systematically targeted small and medium enterprise (SME) segment stocks through coordinated social media campaigns. According to the regulator's findings, the accused accumulated shares in the targeted companies before orchestrating bullish messaging campaigns across Telegram, WhatsApp, and X to artificially inflate prices. Once valuations peaked, the perpetrators sold their holdings at elevated levels to unsuspecting retail investors, realizing profits from the artificially created price spike. The scheme involved 82 stocks across the SME platform. In enforcement action, Sebi barred seven individuals from securities markets and impounded Rs 20.25 crore identified as unlawful gains derived from the manipulation activities.

This case highlights evolving manipulation tactics in India's equity markets, particularly targeting the less-scrutinized SME segment where retail participation has surged. The use of encrypted messaging platforms and social media creates attribution challenges for regulators, though Sebi's successful identification and action demonstrate enhanced detection capabilities. For traders, the incident underscores risks in low-liquidity SME stocks subject to coordinated social media campaigns—a vulnerability that extends beyond India's markets globally. The regulator's swift action and substantial asset impoundment signal commitment to protecting retail investors and maintaining market integrity. Investors should exercise heightened caution with SME recommendations originating from unverified social media sources, particularly those exhibiting coordinated messaging patterns or promises of rapid gains. This enforcement action may also prompt stricter compliance requirements for SME-focused trading platforms and community discussion channels.

Source: Markets-Economic Times