A price rise that was manufactured

“Operator stock” is Indian market slang for a share whose price is being steered by a group of people rather than by buyers and sellers acting independently. The classic version is a pump and dump: build up a holding in a small, thinly traded company; push the price up with trades among yourselves; advertise the rising price to the public with a story; then sell your holding to the people the story brought in. The public’s buying is the exit.

It’s illegal — SEBI (the Securities and Exchange Board of India) prohibits it under the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 — and it recurs, because it works until it’s caught. The finfluencers post listed it as the rarest and most damaging way content gets monetised. This post reads one case from SEBI’s own orders, to see the mechanics with real numbers.

The case is SEBI’s in the matter of Sadhna Broadcast Ltd (now Crystal Business System Ltd, per the final order). The company is named because the orders are public; the individuals aren’t, because the point is the scheme. Everything below is as the orders state it. SEBI’s interim findings were prima facie; orders can be appealed to the Securities Appellate Tribunal, and press reports say at least one party’s appeal against the final order succeeded.

The numbers of a pump

There’s no formula for fraud, but there is arithmetic for its victims:

Rise from the pre-scheme price to the peak   =  peak / start  −  1
Fall from the peak to later                  =  later / peak  −  1
Gain needed to get back to the peak          =  peak / later  −  1
Volume multiple                              =  average daily volume during / before

Every price in the order is adjusted for a 10-for-1 share split in June 2022. A stock’s circuit (price band) is the furthest its price may move in a day; a stock locked at the upper circuit has buyers queued and almost no sellers, and at the lower circuit the reverse.

Figure Source
Closing price before the examination period (April 2022) ₹2.76 Interim order
Close on 14 July 2022, end of “patch 1” ₹12.68 (+360%) Interim order
Peak close, 12 August 2022 ₹33.15 (+161% more; 12× the start) Interim order
Days at the upper circuit in patch 1 39 of 56 Interim order
Average daily volume: before / patch 1 / patch 2 (shares) 43,740 / 2,59,561 / 18,92,638 Interim order
Unique buyers: patch 1 / patch 2 2,319 / 77,293 Interim order
Small shareholders: June → September 2022 2,167 (3.53% of shares) → 55,343 (25.42%) Interim order
December 2022: lower circuit every trading day 22 days, ₹17.90 → ₹12.10 (−32.4%) Final order
Price at the time of the final order (May 2025) “around Rs. 2.60” Final order

From the ₹33.15 peak to about ₹2.60 is a fall of 92.2%. Getting back to the peak from there would take a gain of 1,175% — the arithmetic of losses at its most extreme.

How the scheme worked, per the orders

The interim order (2 March 2023) sorts the 31 people and entities it named into four roles:

  1. Volume creators “who both bought and sold shares … hence contributing to a rise in trading volumes and interest in the scrip.” In the first patch — from late April to mid-July 2022 — average daily volume rose 5.9 times and the price 4.6 times, before the videos.
  2. Misleading message disseminators, who ran two YouTube channels. In the second half of July 2022, videos with false claims went up; five videos drew a combined 3.02 crore views, “aided by promotion through paid advertising campaigns” — the order traces debits for Google ads of ₹4.72 crore in one noticee’s bank account over January–September 2022.
  3. Net sellers — including promoter shareholders — who “offloaded a significant part of their holdings at inflated prices and booked profits.” The order found that “the sale of shares by many of the Net Sellers had matched with the buy orders of the Volume Creators”, and that the disseminators sold “contrary to the buy recommendations in the YouTube Channels.”
  4. Information carriers, who passed information between the others.

The videos’ claims, as the order records them, included a large film contract with “a big American corporation” and a technical-analysis pitch: “The technical indicators like Relative Strength Index (RSI) and Moving Average Convergence/Divergence (MACD) suggest that the price of the company is very bullish mode and the target price is INR 76 in three months and INR 340 in one year.” The company posted a denial on BSE on 18 July 2022; two of the videos were uploaded after it. The order also notes “no material relevant price sensitive corporate announcements were made during the examination period.” (For what RSI and MACD actually measure — and what they can’t — see those posts. An indicator on a manipulated price measures the manipulation.)

The outcome, in stages:

  • Interim order, 2 March 2023: 31 noticees barred from dealing in securities; alleged unlawful gains of ₹41.86 crore impounded.
  • Confirmatory order, 20 July 2023: the findings confirmed for the parties it covered, with the total alleged gain modified to ₹40,60,66,012.
  • Final order, 29 May 2025: after an investigation covering 64 entities, 7 barred for five years and most others for one; disgorgement with interest and penalties. In the order’s words: “a classic pump-and-dump scheme. The price was systematically pushed upward through collusive trading, followed by aggressive promotional activity to draw in retail investors, and finally, a coordinated sell-off by the promoters.”

Note who holds the shares at the end. Between June and September 2022 the number of small shareholders went from 2,167 to 55,343, and their share of the company from 3.53% to 25.42%.

🧒 Explain it like I'm 10 (optional — skip if this is already clear)

Four friends own all the stickers of a boring cartoon. They start trading the stickers back and forth with each other at higher and higher prices, loudly, in the playground. “Did you hear? Rahul paid ₹50 for one!”

Other kids notice the price going up and want in. Then one friend tells everyone the cartoon is getting a movie. Now everyone wants the stickers.

The four friends sell all their stickers to the other kids at ₹50. There’s no movie. Next week nobody wants the stickers at any price — and the kids who bought last are left holding them.

What the exchanges watch for

SEBI and the exchanges don’t wait for complaints. Two frameworks put restrictions on stocks that trip objective filters, often while a pump is still running:

  • GSM, the Graded Surveillance Measure — introduced by NSE circular of 23 February 2017 for “securities which witness an abnormal price rise not commensurate with financial health and fundamentals like Earnings, Book value, Fixed assets, Net-worth, P/E multiple” (P/E is the price-to-earnings ratio). Stages escalate from 100% margin and a 5% price band to trade-for-trade settlement, trading once a week, and a freeze on upward moves (NSE FAQ).
  • ASM, the Additional Surveillance Measure — in force from 26 March 2018, on parameters including “High Low Variation, Client Concentration, Close to Close Price Variation, Market Capitalization, Volume Variation, Delivery Percentage, No. of Unique PANs, PE” — PANs being the Permanent Account Numbers of distinct traders (NSE FAQ).

A stock on either list isn’t accused of anything: BSE’s FAQ says shortlisting “should not be construed as an adverse action against the concerned security” (BSE FAQ). But it tells you the stock’s price or trading has tripped a surveillance filter — worth knowing before you buy on a tip. SEBI has also issued repeated public cautions against unsolicited tips on SMS, WhatsApp and Telegram, including on 14 October 2020 and 21 May 2025.

Red flags

Signal Why it matters
A sharp rise with no company announcement The final order urged caution with “sudden spikes in prices without any attributable change in fundamentals”
Volume that jumps many times over in a small company Trading among insiders shows up as volume first — here, 5.9 times before the videos
Upper circuit day after day A stock that only goes up and can’t be bought is a stock with no sellers — yet
Unsolicited tips with a target price and a deadline SEBI’s cautions warn specifically about tips “indicating target prices”
Claims the company itself denies Here, the denial was on BSE’s site while videos kept going up
The stock is on an ASM or GSM list Not an accusation, but a filter has noticed something
Promoters or large holders selling into the rise Visible in quarterly shareholding patterns, usually too late

Common mistakes

  • Taking a rising price as confirmation of the story. In a pump the price is the advertisement. The rise is manufactured precisely so that it looks like evidence.
  • Assuming you’ll get out in time. The order records a month of lower circuits in December 2022. When a stock is locked at its lower limit there are sellers and no buyers — a stop-loss order can’t execute.
  • Trusting technical signals on thin, manipulated stocks. RSI, MACD and breakouts describe what the price did. When the price is the product, they describe the product.
  • Thinking a regulator’s order gets your money back. Impounding and disgorgement go after the wrongdoers’ gains; they are not, in general, a refund to everyone who bought at the top.

Takeaway: A pump and dump manufactures the evidence — a rising price and heavy volume — then sells to whoever believes it. In this case SEBI’s orders record a price up 12 times with no price-sensitive company news, and a later fall of 92.2% from the peak. When a small stock is rising with no announcement and a stranger is urging you in, ask who is selling to you.