SEBI Imposes Rs1,860 Crore Penalties in 5 Years as Investors Lost Crores to Pump-and-Dump Schemes: Govt

Moneylife Digital Team 19 August 2025

Investor Interest

Market regulator Securities and Exchange Board of India (SEBI) has intensified its crackdown on fraudulent investment schemes, imposing penalties totalling Rs1,860.03 crore over the past five years to curb pump-and-dump scams in the securities market.

According to data tabled in the Lok Sabha by minister of state for finance Pankaj Chaudhary, SEBI also directed the disgorgement of Rs452.60 crore in unlawful gains during this period under the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market (PFUTP) Regulations, 2003.

Between FY20-21 and FY24-25, SEBI recorded 154 complaints of pump-and-dump schemes, where manipulators artificially inflated stock prices before offloading them onto unsuspecting retail investors, the government says.

The numbers underline that, despite regulatory vigilance, such schemes continue to pose a persistent threat to small and retail investors, particularly in the small-cap and micro-cap segments.

The government response highlights that SEBI has adopted a surveillance-driven and educational approach to counter pump-and-dump activities:

• Continuous monitoring of stock price movements for abnormal trends not aligned with company fundamentals.

• Issuing scrip-specific cautionary messages through trading members to alert investors.

• Conducting nationwide investor education programmes covering topics like identifying investment scams, risks of futures & options (F&O), and safe digital practices.

• Coordinating with stock exchanges and depositories to enhance market integrity.

The Lok Sabha reply also referred to the recently reported Rs300 crore pump-and-dump scam affecting over 4,000 investors, noting that SEBI has already initiated a detailed examination. The minister assured that the probe would be carried out in a time-bound and transparent manner, holding market manipulators and colluding intermediaries accountable.

The data underscores a recurring cycle: despite hefty penalties, fraudulent operators continue to find ways to lure retail investors with promises of quick profits. SEBI’s efforts in surveillance and enforcement are significant, but investor education remains the most powerful shield against such schemes.

With the rise of retail participation in equity markets post-COVID-19, especially in low-priced small-cap stocks, regulators face a mounting challenge to balance market freedom with investor protection. The government has indicated that technological interventions and regulatory reforms will continue to be rolled out to detect manipulation at an early stage.

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