In a major crackdown on stock manipulators, Sebi conducted raids in seven cities last week. The cities covered included Kolkata, Mumbai, Delhi, Ahmedabad, Jaipur, Rajkot, and Surat. Around 60 Sebi officials and forensic experts were part of the team. Such operations are usually led by Dy General  Manager level officials and supervised by General Manager rank officials.

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As per sources, Sebi had received alerts that some operators in collusion with promoters of a few companies with almost no business and liquidity, were pumping up the share prices of companies. These manipulators were mainly using social media platforms to lure investors with huge returns. This manipulation has been going on for many months.

It is believed that these operators in collusion with others have made illegal gains of more than Rs 150 crore through this modus operandi. 

Sebi had secured a search warrant against seven stock manipulators. The mastermind of the scam is from Kolkata.

The source also indicates that initial findings suggest that the Kolkata-based mastermind is connected to an accused whose name recently surfaced in ED action. As per sources, SEBI suspects that operators from Dubai are also actively participating in such activities.

The pump and dump scam was being carried out by promoting and luring listed companies with no significant business as high-return stocks. Modus Operandi was like this, manipulators used to first create an audiovisual of unknown companies and lure investors by promising high return potential, once investors started buying these stocks and prices went up, the operators would just dump the shares.

In recent years, Sebi's surveillance systems have improved through the use of technology. Sebi gets alerts very quickly and then data is analysed and enforcement actions are taken after analysing the data. The data analysis sometimes takes 2-3 months to establish links and basis which the restrictive orders are passed.

An email sent to Sebi seeking a response on the issue remains unanswered. 

To deal with the manipulation and unfair practices, Sebi last year proposed a regulatory framework for dealing with Unexplained Suspicious Trading Activities. 

As per the proposed regulation, in all such cases, where the trading pattern appears to be repeatedly suspicious, investors would be required to explain such trading activities.  

The idea is similar to the “unexplained credits”  provision in the Income Tax Act.