How It Works
Fraudsters promote a little-known stock through Telegram groups or SMS "tips," claiming insider knowledge of a coming price surge. As victims buy in, the price rises (the "pump") — then the fraudsters, who bought in early and cheap, sell off everything (the "dump"), crashing the price and leaving new investors with losses.
Real Example
A Telegram group with thousands of members shares a "hot stock tip" claiming insider information about a small-cap company. The stock spikes as members buy in, then crashes 60% within days after the group admins sell their holdings.
Red Flags 🚩
- Unsolicited "insider" stock tips via SMS, Telegram, or WhatsApp
- Claims of guaranteed quick profits on a specific small-cap stock
- Pressure to buy "before the price moves" within hours
- Tip source has no verifiable SEBI registration as a research analyst
Protection Steps 🛡️
- Never act on unsolicited stock tips from social media or messaging groups.
- Check if the tipster is a SEBI-registered research analyst.
- Be suspicious of any "guaranteed" short-term price prediction.
- Do your own research using verified financial data before investing.