SEBI probing large-scale ‘pump-and-dump’ activities in select stocks
18 Feb 2013
The Securities and Exchange Board of India (SEBI) has detected large-scale manipulation of trade volumes by certain brokers and other entities by luring small investors into select scrips.
These manipulations, called 'pump-and-dump' activities in stocks have come under SEBI lens following a surge in these manipulative activities.
SEBI said its Data Warehousing and Business Intelligence System (DWBIS) detected the artificial creation of huge volumes with significant buying activities.
A senior SEBI official said the pump-and-dump activities have been more frequent in certain mid-cap stocks, especially in the infrastructure sector.
These stocks mostly belong to companies that have been facing problems relating to funding plans, the official added without naming the companies.
He said the DWBIS system has now begun providing ''pattern recognition algorithms'' to monitor trade and order data of SEBI-networked broker clients, helping the regulator identify those who possibly collectively indulge in violations of securities laws.
