**Executive Summary:**
This document addresses measures taken by the Government and SEBI to protect investors from fraudulent pump-and-dump schemes in the securities market. It outlines SEBI's regulatory and surveillance frameworks, investor education initiatives, and actions taken against pump-and-dump schemes under existing regulations. The document also provides data on reported cases and penalties levied over the past five financial years.
**Key Points / Main Content:**
* **Investor Protection and Market Stability:**
* SEBI conducts regular market surveillance to detect abnormal price increases not aligned with company fundamentals.
* Alerts from surveillance and complaints are used as market intelligence.
* Trading members must disseminate scrip-specific cautionary messages to investors.
* SEBI, with stock exchanges and depositories, conducts investor education programs on investing principles, risks, and scam awareness.
* SEBI has taken steps to increase investor protection and market stability regarding the risks and volatility associated with the Futures Options (FO) segment.
* **Investigation of Pump-and-Dump Schemes:**
* SEBI is conducting a detailed examination into pump-and-dump schemes based on market intelligence.
* **Regulatory Framework:**
* SEBI administers the SEBI Prohibition of Insider Trading Regulations, 2015 (PIT Regulations) and the SEBI Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market Regulations, 2003 (PFUTP Regulations), which cover pump-and-dump schemes.
* **Pump-and-Dump Cases (FY2020-FY2025):**
* FY2020-21: 43 cases
* FY2021-22: 11 cases
* FY2022-23: 34 cases
* FY2023-24: 41 cases
* FY2024-25: 25 cases
* **Penalties and Disgorgement (FY2020-FY2025):**
* Penalties levied under SEBI PFUTP Regulations, 2003: ₹1,860.03 crore.
* Disgorgement of unlawful gains: ₹452.60 crore.
**Impact Analysis:**
* **Small and Retail Investors:**
* *Impact:* Protected from fraudulent schemes through surveillance, education, and enforcement actions.
* *Action Required:* Be aware of cautionary messages from trading members, participate in investor education programs, and report suspicious activity.
* **Securities and Exchange Board of India (SEBI):**
* *Impact:* Responsible for maintaining market stability and protecting investor interests through regulatory frameworks and surveillance.
* *Action Required:* Continue to enhance surveillance mechanisms, conduct investigations, and enforce regulations against fraudulent activities.
* **Trading Members:**
* *Impact:* Required to disseminate cautionary messages to investors.
* *Action Required:* Implement mechanisms to provide scrip-specific cautionary messages to investors.
* **Stock Exchanges and Depositories:**
* *Impact:* Collaboration with SEBI on investor education and awareness programs.
* *Action Required:* Participate in and support investor education initiatives across the country.
Key Entities Referenced
Securities and Exchange Board of India: The regulatory body in India responsible for regulating the securities market.
SHRI VIJAYKUMAR ALIAS VIJAY VASANTH: Member of LOK SABHA who raised the question about fraudulent schemes in the securities market.
SHRI PANKAJ CHAUDHARY: Minister of State for Finance, who provided the answer to the question raised in LOK SABHA.
SEBI Prohibition of Insider Trading Regulations, 2015: Regulations administered by SEBI to prevent insider trading in the securities market.
SEBI Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market Regulations, 2003: Regulations administered by SEBI to prevent fraudulent and unfair trade practices, including pump-and-dump schemes, in the securities market.
pump-and-dump schemes: Fraudulent schemes in the securities market where artificial inflation of a stock's price is followed by a rapid sell-off.
LOK SABHA: The lower house of the Parliament of India, where the question regarding fraudulent schemes was raised.
Ministry of Finance: The government ministry responsible for the financial affairs of India.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF ECONOMIC AFFAIRS
LOK SABHA
UNSTARRED QUESTION NO. 3938
TO BE ANSWERED ON MONDAY, AUGUST 18, 2025/SRAVANA 27, 1947 (SAKA)
FRAUDULENT SCHEMES IN THE SECURITIES MARKET
3938. SHRI VIJAYKUMAR ALIAS VIJAY VASANTH:
Will the Minister of Finance be pleased to state:
(a) the measures taken/to be taken by the Government and SEBI to protect small and
retail investors from fraudulent pump-and-dump schemes in the securities market;
(b) the manner in which the Securities and Exchange Board of India (SEBI) plan to
ensure that the investigation into the recently reported Rs. 300 crore pump-and-
dump scam, reportedly affecting over 4,000 investors is done in a time-bound and
transparent manner and that all perpetrators, including market manipulators and
colluding intermediaries are held accountable;
(c) the regulatory reforms or technological interventions are being proposed or
implemented by the Government to detect and prevent pump-and-dump activities
in listed stocks, particularly in the small-cap and micro-cap segments; and
(d) whether the Government has data on the number of pump-and-dump cases
reported and investigated by SEBI during the last five years, including the total
estimated investor losses and penalties or enforcement action taken in this regard?
ANSWER
MINISTER OF STATE FOR FINANCE
(SHRI PANKAJ CHAUDHARY)
Ans(a) & (c): Securities and Exchange Board of India (SEBI), has put in place regulatory
and surveillance frameworks for effecting market stability and for the protection of
interest of investors in the stock market,
1. It conducts regular surveillance of trends in the securities markets to enhance
market integrity and safeguard interest of investors. Surveillance systems are put
in place to check the abnormal rise in the prices of securities which are not
aligned with fundamentals of companies.
2. The alerts generated by SEBI’s surveillance mechanism along with complaints
alleging non-compliance with Regulations are treated as inputs for market
intelligence by SEBI.
3. Trading members have also been mandated to disseminate scrip specific
cautionary messages so as to increase awareness and caution the investors.4. SEBI, in co-ordination with stock exchanges and depositories, also carries out
regular investor education and awareness programs across different parts of the
country. These free of cost programs, inter-alia, cover various topics such as
basic investing principles, product features, risks involved, investor rights and
responsibilities, common features of investment scams, pump and dump
schemes, healthy digital practices, etc
5. SEBI has also taken steps to increase investor protection and market stability
with respect to the risks and volatility associated with the Futures & Options
(F&O) segment.
Ans (b): In view of market intelligence received with regard to pump and dump in certain
scrips, detailed examination by SEBI in this matter is underway.
Ans (d): SEBI administers the SEBI (Prohibition of Insider Trading) Regulations, 2015
(PIT Regulations) and the SEBI (Prohibition of Fraudulent and Unfair Trade Practices
relating to Securities Market) Regulations, 2003 (PFUTP Regulations), which includes
pump-and-dump schemes, front running etc. The number of pump and dump cases
reported during the last five financial years is as given below:
No. of cases reported
FY 2020- FY 2021-
Particulars 21 22 FY 2022-23 FY 2023-24 FY 2024-25
Pump and dump 43 11 34 41 25
Note: The data is based on the number of complaints received
Between April 2020 and March 2025, SEBI, under the SEBI PFUTP Regulations, 2003,
levied penalties totalling ₹1,860.03 crore and passed directions of disgorgement of
unlawful gains for ₹452.60 crore.
***