What is &8216;pump-and-dump&8217; Scam? Due to which investors are losing billions of rupees, SEBI conducted raids in many states

Pump And Dump Scam In Share Market: Amidst the increasing participation of investors in the domestic stock market, new methods of fraud are also emerging. In view of this, the Security and Exchange Board of India (SEBI) has revealed a big pump-and-dump network while conducting raids in many cities of the country.

This fraud is especially seen in small and penny stocks, where investors are duped by artificially inflating the share prices. This action of SEBI is being considered an important step towards protecting investors and maintaining transparency in the market.

Action in many cities including Mumbai-Bangalore

The case of manipulation in the Indian stock market has once again made headlines, where market regulator has conducted search and seizure operations in several states against a network linked to pump-and-dump scams. This action has been taken in major cities like Mumbai, Bengaluru, Bhuj and Hyderabad. Many important documents and digital records have been seized in the operation conducted by the investigating agencies for three days.

The matter is related to stock manipulation

Initial investigation has indicated that this matter is related to organized stock manipulation. According to reports, the role of a small investment banking company and a drip irrigation company in this network is being investigated. Officials are closely examining trading patterns, fund flows and communication records to understand which people and entities were in coordination.

What is a pump-and-dump scam?

Pump-and-dump is a type of securities fraud in which the fraudster first buys a low-value, i.e. penny stock They buy a stock in large quantities, then spread false positive news, tips or rumors about that stock through social media platforms like YouTube, Telegram and WhatsApp. Due to this, there is a competition among the common investors to buy that share and the price of those shares starts increasing rapidly, this is called pump. After this, when the share price reaches a high level, then the operators make profit by selling their shares. This is called a dump.

Also read: DA Hike: Government employees rejoice, increase in DA after a long wait; Know how much your salary will increase based on your pay level

SEBI strict against fraud

After this process, the share price falls rapidly, due to which small investors have to suffer huge losses. SEBI’s recent action clearly indicates that the regulator is taking a strict stance against such frauds. Investors are also advised to check the fundamentals of the company before investing in any stock and avoid rumors spreading on social media.