SEBI conducts multi-city searches in suspected pump-and-dump case: Report

The Securities and Exchange Board of India (SEBI) has carried out search and seizure operations across multiple cities as part of a probe into an alleged stock manipulation network, Moneycontrol reported, citing sources.

The probe is centred on suspected “pump-and-dump” activity, where stock prices are allegedly inflated through coordinated trades and corporate actions before being offloaded at higher levels.

According to the report, the regulator’s investigation team conducted searches at locations in Mumbai, Bhuj, Bengaluru and Hyderabad last week, with Bhuj emerging as a key centre in the case, suggesting a wider operational spread beyond major market hubs.

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Sources told Moneycontrol that the investigation involves a small investment banking firm and a drip irrigation company, with authorities examining trading patterns, fund flows and communication records to identify links between entities and individuals.

One of the concerns flagged by the regulator is a suspected misuse of a bonus issue despite limited financial performance, which may have been used to attract investor interest and push up share prices.

A source aware of SEBI's action said, "The searches, which lasted three days and concluded late Friday night, led to the seizure of documents and digital evidence that could help establish the alleged manipulation network."

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Separately, RM Drip and Sprinklers System Ltd in an exchange filing on Sunday, April 26, said that searches were conducted at the premises of its promoter-directors between April 22 and early April 23.

The company added that there was no material impact on its business or financials and said SEBI had not disclosed the reason for the action.

The development follows earlier enforcement actions by the regulator this month in cases linked to alleged pump-and-dump activities. SEBI has previously highlighted patterns such as sharp price movements, misleading corporate announcements and concentrated trading among related parties in similar cases.

The report added that the regulator is likely to take further action once findings from the ongoing investigation are finalised.