SEBI Imposes ₹1,860 Crore Penalties in 5 Years Amid Rising Pump-and-Dump Scams

New Delhi: The Securities and Exchange Board of India (SEBI) has intensified its crackdown on fraudulent stock market schemes, imposing penalties worth ₹1,860.03 crore over the past five years to curb pump-and-dump scams that continue to trap retail investors.

SEBI Actions Against Fraudulent Practices

According to data presented in the Lok Sabha by Minister of State for Finance Pankaj Chaudhary, SEBI also directed the disgorgement of ₹452.60 crore in unlawful gains during this period under the PFUTP Regulations, 2003.

Between FY2020-21 and FY2024-25, SEBI registered 154 complaints related to pump-and-dump operations, where manipulators artificially inflate stock prices and then offload them to unsuspecting investors. These scams have particularly affected small-cap and micro-cap stocks, raising serious concerns about retail investor safety.

Preventive and Educational Measures

To strengthen market integrity, SEBI has adopted both surveillance-driven and educational approaches, including:

• Monitoring abnormal stock price movements misaligned with fundamentals.

• Issuing cautionary messages via trading members to alert investors.

• Conducting nationwide investor awareness programmes on scams, F&O risks, and digital security.

• Enhancing coordination with stock exchanges and depositories.

Recent Scams Under Scrutiny

The government also referred to the recently reported ₹300 crore pump-and-dump scam, which impacted more than 4,000 investors. SEBI has launched a time-bound investigation to hold both market manipulators and colluding intermediaries accountable.

Challenges in Investor Protection

Despite stringent action and heavy penalties, fraudulent operators continue to exploit retail investors’ appetite for quick profits. Regulators face the challenge of balancing market freedom with investor protection, particularly after the rise in retail participation in small-cap stocks post-COVID-19.

The government stressed that technological interventions and regulatory reforms will be further deployed to detect and prevent such manipulative practices at an early stage.