What is YouTube and Instagram pump-and-dump scheme, here's all you need to know

A case has come to the fore of some manipulators on social media pumping and dumping some shares by promoting them by creating separate accounts. We are going to explain in detail in this report how this whole game operates.

What is YouTube and Instagram pump-and-dump scheme, here's all you need to know

Recently, action was taken by the Securities and Exchange Board of India (SEBI) while disclosing the pump and dump racket on YouTube. Sebi on Thursday barred actor Arshad Warsi, his wife Maria Goretti and promoters of Sadhna Broadcast from the securities market. This ban has been imposed in the case of uploading misleading videos on YouTube channels.

Along with this, SEBI shared how the whole system of manipulation of shares was run. Today, in this report, we will know how this type of scheme used to work and how you can avoid it. 

How pump and dump scheme works?

Firstly, the manipulator starts a YouTube or Instagram channel related to the stock market. Then a huge amount of money is spent to promote this channel. In recent cases channels with names like Moneywise, The Advisor, Midcap Calls and Profit Maker were started by some manipulators to pump and dump the shares of Sadhna Broadcast Limited and Sharpline Broadcast Limited. For this, an amount of Rs 4.72 crore was spent on promotion by both the companies.

In the case of Sharpline, it was claimed that this company was being bought by Adani Group, after which a large number of investors bought the shares of this company and as soon as the share price went up, the shares of the company were bought by the manipulators began to be sold. 

What steps is SEBI taking?

SEBI has made a complete process to investigate such cases, under which it is seen that the culprit is not pumping any stock through the account of his family or relatives. This is ascertained through KYC details. In the recent Axis Mutual Fund frontrunning case, it was seen that unrelated accounts were used to commit fraud in shares. SEBI had also taken a tough step in this matter. 

How to avoid it?

First of all, you have to keep in mind that no share related advice is to be taken from YouTube, Instagram or any other social media app. Many times big influencers on social media do not share the promotion and related to it. If you are taking any information related to shares from anyone, then check once whether your Investment Advisor is registered with SEBI or not. 

On the other hand, if it is being claimed by an influencer that you will get a guaranteed return on a share or such a strategy is being told, in which you are being claimed not to be harmed, then you should be careful with such people.