Sebi probes Ahmedabad-based stock manipulation scam that duped 4,000 investors: Report
stock manipulation scam
based in Ahmedabad has come under the scanner of the
Securities and Exchange Board of India
(
Sebi
), after nearly 4,000 investors were allegedly misled through a pump-and-dump operation involving revived defunct companies, according to a media report.
Sebi is investigating how a network of shell companies was used to artificially inflate share prices of dormant BSE-listed firms, before offloading them to unsuspecting retail investors, NDTV Profit reported. Several individuals linked to this case are also said to have past connections with violations involving
LS Industries Ltd
.
The regulator is treating the matter as a priority and is expected to issue an order in the next three to six months, the report said citing people familiar with the matter.
The scale and structure of the operation have raised regulatory concerns, with investigators indicating that the case could be linked to a wider pattern of market abuse, including irregularities in preferential allotments. One person familiar with the matter said the sheer volume of such violations makes enforcement particularly challenging.
Sebi, in a statement issued Friday, said it had conducted search and seizure operations at several locations during June 2025 in connection with the ongoing probe. The regulator said it had gathered substantial evidence, which is currently under examination, and that any further regulatory action will depend on the outcome of this review.
The regulator did not disclose the names of companies or individuals involved, citing the ongoing nature of the proceedings. But the clarification followed media reports of the regulator acting against entities suspected of distorting stock prices to mislead investors, the defining feature of a pump-and-dump scheme.
Such operations typically involve the dissemination of false or misleading information to push up stock prices, triggering retail interest. Once the price peaks, those behind the scheme exit their positions, often leaving small investors with steep losses.
Also read |
Sebi confirms multiple raids in 'pump-and-dump' case, investigation ongoing
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