Arshad Warsi, named in YouTube pump-and-dump scheme

Image Credit : WikiMedia Commons

SEBI recently banned Bollywood star Arshad Warshi, his wife, and promoters of the Shadhna broadcast from the securities market for promoting a pump and dump scheme on their YouTube channel.

Image Credit : WikiMedia Commons

What is a pump and dump scheme?

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The pump and dump scheme is a stock manipulation scheme through which the price of a stock can be pumped by spreading false information about the stock.

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The fraudsters who carry out such schemes generally have an established position in the company stock; after they pumped these stocks, fraudsters dumbed down their own stock by selling stock at inflated prices.

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Once you stop pumping a stock, the stock price typically falls and investors lose their money.

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SEBI noted that Arshad Warsi made a profit of Rs. 29.43 lakhs and his wife a profit of Rs. 37.56 lakhs.

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Risk Disclaimer: It is very important to take professional advice before investing in any asset. This short form of content is just for educational purposes only.

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