Sebi cracks down on 'pump and dump': How it works, what you should do

From shady stock tips to sudden crashes, understand how 'pump and dump' scams unfold and what you can do if you've already fallen into the trap

India’s market regulator Sebi is cracking down on “pump and dump” scams, a type of securities fraud that’s been gaining ground on social media and messaging apps for a while now. Sebi has conducted multiple search and seizure operations in June 2025 and uncovered “incriminating evidence” related to such schemes. Investigations are ongoing.

 

But what exactly are these scams? How do they work, and what can retail investors do to avoid falling into the trap?

What is a pump and dump scam?

In a pump and dump operation, fraudsters artificially inflate the price of a stock by spreading misleading or false information,