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The affair of a well-known TV pundit running a stock pump-and-dump racket has generated predictable outrage. SEBI has accused this television regular, who also commands a substantial social media following, of orchestrating a classic manipulation scheme, allegedly pocketing Rs 11.37 crore by buying stocks, recommending them on air, and then selling once his media appearances inflated prices. Add to this BSE's recent Rs 25 lakh fine for giving certain users early access to corporate announcements, and you have what appears to be a damning indictment of market integrity.
Except it isn't. What these cases demonstrate is precisely the opposite: that India's markets are remarkably well-regulated and that manipulation schemes, however cleverly constructed, have a limited shelf life.
Suggested read: The old-fashioned art of the scam
Consider this: Sanjiv Bhasin’s case. SEBI's investigation, triggered by complaints in late 2023, covered a four-and-a-half-year period from January 2020 to June 2024. The regulator didn't just slap together a quick order based on rumours. It conducted a thorough investigation, analysed trading patterns across many entities, traced the flow of funds, and produced a 149-page order that reads like a financial thriller. The manipulators have been barred from the markets, their profits have been impounded, and their assets have been frozen. The system worked exactly as it should.
The BSE case tells a similar story. During a routine inspection from February 2021 to September 2022, SEBI discovered that the exchange's system architecture allowed its Listing Compliance Monitoring team and paid subscribers to access corporate announcements before they were publicly released. BSE argued these were technical violations that caused no harm, but SEBI wasn't having it. The regulator imposed the penalty and demanded corrective measures, emphasising that even technical breaches of transparency norms are unacceptable. However, I do wish that the fine had been much larger.
Suggested read: Rackets shining brightly
Both cases underscore a fundamental truth about modern markets: information asymmetries and manipulation schemes may exist, but they're increasingly difficult to sustain. The combination of electronic trading, sophisticated surveillance systems, and proactive regulation means that suspicious patterns get flagged relatively quickly. What might have gone undetected for years in earlier decades now gets caught within months or, at most, a few years.
However, what's truly important for ordinary investors is that these schemes operate entirely within the realm of short-term trading and momentum plays. They prey on people who are looking for quick profits from hot tips and flavour-of-the-day recommendations. If you're the sort of investor who changes your portfolio based on what someone says on television, then yes, you're vulnerable to this kind of manipulation.
Suggested read: Scamsters scamming themselves
However, if you're doing what sensible investors have always done--studying companies, understanding their businesses, and investing for the medium to long term--then market manipulation is largely irrelevant to you. The stocks that are typically targeted for pump-and-dump schemes are those with high volatility and speculative interest. They're rarely the sort of steady, fundamentally sound businesses that long-term investors gravitate towards.
Think about it logically. If you're buying shares in a company because you believe its business will grow over the next five to ten years, what does it matter if some television pundit temporarily inflates the price? The real damage from these manipulation cases isn't to markets or serious investors. It's to public confidence in the investment process itself. Every scandal generates headlines that make investing seem like a rigged game where ordinary people can't win. This perception keeps people away from equity markets entirely, which is far more harmful than any individual manipulation scheme.
Suggested read: Beating the pros
What should sensible investors take away from these cases? First, ignore stock tips from television pundits, social media influencers, and anyone else promising quick profits. Second, stick to the basics: diversify your investments, buy quality companies at reasonable prices, and hold for the long term. Third, remember that regulatory action against manipulation makes markets safer, not more dangerous.
For long-term investors focused on building wealth through patient capital appreciation, market manipulation is just background noise. The fundamentals of good investing – research, diversification, and discipline – remain unchanged, regardless of the schemes operating in the short-term trading space.
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Also read: A strike at the finfluencers
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