SEBI Cracks Down on Rs 300 Crore ‘Pump and Dump’ Scam Across Major Cities

by Priya Bhatiya

Posted on June 20, 2025

SEBI Raids on Shell Companies in Rs 300 Crore ‘Pump and Dump’ Scheme

Overview

The Securities and Exchange Board of India (SEBI) conducted large-scale raids across Ahmedabad, Mumbai, and Gurugram to dismantle a major Rs 300 crore pump and dump stock market scam. This operation, carried out on Wednesday, is regarded as one of SEBI’s biggest raids in terms of monetary value.

Key Details of the Scam

• The scam involved 15-20 shell companies, allegedly created by promoters of certain listed companies, primarily in the agro-tech sector.
• These shell companies acted as proprietary traders, buying and selling shares of the listed companies to artificially inflate stock prices.
• Once the share prices were significantly pumped (for example, from below Re 1 to Rs 40 in less than a year), the perpetrators sold their holdings to unsuspecting retail investors, causing the prices to crash back to Rs 2-3.
• There was no corresponding improvement in the business or earnings of these companies, indicating clear market manipulation.
• SEBI seized several documents, including company records and rubber stamps, during the raids. The preliminary estimate of the scam is at least Rs 300 crore, with further details expected as investigations continue.

Modus Operandi

• Promoters used shell companies to trade their own stocks, creating false market activity and price surges.
• Retail investors, lured by the rapid price rise and possibly influenced by promotions on Telegram channels by unregistered analysts, bought into these stocks at inflated prices.
• After the price peaked, the manipulators exited, leaving retail investors with significant losses.

SEBI’s Actions and Investigation

• SEBI exercised its search and seizure powers, which are rarely invoked, to collect evidence in this case.
• The regulator is also probing the role of certain Telegram channels and non-SEBI registered analysts who promoted these stocks, to determine if they were part of the manipulation network.

Impact and Significance

• This raid is among the largest in SEBI’s history by value, highlighting the regulator’s increasing vigilance against stock market frauds.
• The case underscores the risks retail investors face from pump and dump schemes, especially in small and mid-cap stocks with low liquidity and limited oversight.

Quote from the Investigation

“The stock of one of the companies in question rose from below Re 1 to Rs 40 in a span of less than a year and then the stock again fell back to about Rs 2-3. There has been no change in terms of business of the company and its earnings did not witness any meaningful change clearly indicating a fraudulent scheme,” said one of the persons cited.

SEBI’s decisive action aims to deter similar market abuses and protect retail investors from fraudulent schemes in the future.

Ref: Sebi raids shell companies involved in Rs 300 ‘pump and dump’ scheme across Ahmedabad, Mumbai and Gurugram