Pump and Dump Schemes: SEBI Search and Seizure Action
Why in the news
SEBI disclosed earlier searches at several locations as part of a crackdown on market manipulation.
How it works
| Phase | What happens |
|---|---|
| Pump | Hype via insider tips, big business news or deal rumours lifts price and volume |
| Dump | Promoters sell holdings at inflated prices; price crashes and retail investors lose |
Regulatory action
- Tools: investigations, penalties, trading bans and criminal prosecution.
- Similar regulators abroad: SEC (US) and FCA (UK).
Exam angle
- Regulation: PFUTP.