Welcome to social media and stock manipulation 101.
Today, we’ll walk you through the finer nuances of harnessing the influence of social media, inflating stock prices, fooling unsuspecting and naïve individual investors, and ending things with a bang (no whimper!) while market regulators follow your trail and the law catches on with you.
In this installment we will unpack the gist of the top notch stock manipulation precedent set by Manish Mishra and his 44 player Nexus, which has helped him and others rake in sizable (illegal) profits of a whopping Rs 54 crore from two stocks – Sadhna Broadcast and Sharpline Broadcast.
Here’s a step-by-step guide to orchestrating a pump-and-dump con on YouTube:
1. Bring your A-Game to work
If there’s anything to learn from Mishra, it’s that bringing your A-game to work every day can pay off beautifully. With eyes firmly on the end goal, you need to have a clear understanding of the risks and costs the gig will entail before it takes off on its own.
This, of course, requires steadfastness and devotion, and this is where Mishra’s devotion shines through.
You can never get enough of a good thing. Heeding this maxim, he ran four YouTube channels. These four channels — with sinister and righteous-sounding names like The Advisor, Moneywise, Profit Yatra, and Midcap Calls — together had over 50 million viewers.
Mishra understands that to make an omelet you have to break eggs. To get big returns, he first invested a lot of money. From January to September 2022 he paid Rs 4.72 crore to Google AdSense to promote his videos. As recently as February 20, these channels were still releasing videos with “outlandish claims” despite the Securities and Exchange Board of India (SEBI) investigation into them.
2. Don’t be afraid to dream big!
For stock price inflation to pick up speed, bombastic is the way to go. Defrauding retail investors with sleep-inducing, jargon-ridden fundamental analysis is destined to be a dud. Go big instead.
Don’t let something as uncomfortable as facts and the truth get in the way of big bucks. Amaze and impress with exclusive news that no credible, self-respecting news platform will ever write about or broadcast. The folks at SEBI might not agree with you, but don’t let their party-pooper ways get you stuck. Take plenty of notes from Mishra’s book on how to tweak your claims. Here are a few examples of his work:
“The company has a 5G license. Sadhna Broadcast will be acquired by the Adani Group. The company’s margins will increase after the deal.”
· “A major American company has signed a deal for Rs 1,100 crore to produce 4 devotional films with the money being raised by the American investors but the rights remaining with Sadhana Broadcast.”
· “Major mutual funds have already bought the stock.”
· “The company has signed a major deal with Sony Pictures and Zee to create 4 major films and 9 web series. The company will earn approximately Rs. 2.5 crore from this deal. In said deal, the investment is made by Sony and Zee, but the content rights are owned by Sharpline Broadcast Ltd.”
Once the groundwork is laid to drive stock prices higher with video, you need to fuel the excitement with an accompanying increase in volume. This is obviously not a one man game. Mishra understood this very well and his work in the two scripts sheds light on how networking can deliver the multiplier effect we all strive for in our careers and business.
From family members to stockbrokers and corporate patrons to actors like Arshad Warsi and his wife, Mishra’s network – either through himself or other actors – was widespread. With Mishra as the central hub in the larger network, the volumes and prices of the two stocks miraculously began to surge higher, showing that no goal is too big when we act with one will and one mind.
4. Knowing when to stop
The claims in the videos worked like a charm. Trading volume in Sadhna shares shot up almost six-fold between April and July last year and the share price rose to Rs 12.68 from Rs 2.76 in the same period. Mishra’s genius, however, was unstoppable. By September, the price reached Rs 33.15.
The same was the case for Sharpline: the share price rose more than six-fold to Rs.53.30 on June 13 from Rs.8.47 on April 19. Trading volume increased by 5,408 percent.
The numbers speak volumes (pun intended) about Mishra’s business acumen. At the end of the mishap the number of small shareholders in Sadhna with investments of up to Rs 2 lakh had increased from 2,167 people to 55,343. Retail investor ownership rose from 3.53 percent on June 30 to 25.42 percent on September 30. At the same time, the number of major shareholders – those investing more than 2,000 rupees – fell from 22 to 14 and their shareholdings shrank to 25.27 percent from 37.67 percent.
The market regulator found how Mishra and a group of volume creators, profiteers and promoters began dumping their shares as enthusiasm for the two stocks began to take hold.
Obviously, you have to get started before things get rough.
5. Pay your dues
Karma has this annoying habit of catching up, and Mishra was no exception. For the time being, SEBI has ordered the confiscation of winnings made by all players and barred them from entering the markets.
They were all ordered to provide SEBI with an inventory of their movable and immovable property and were ordered not to alienate or sell any of the property. What a party muffle!
The regulator will of course continue to crack down on all of this activity.
No doubt there will be other “visionaries” and “dreamers” out there who will keep coming up with clever ideas to separate investors and their hard-earned cash. With SEBI hot on their heels, they better be able to run as fast as their scrips can soar.