Social Media and Stock Manipulation 101: How to con investors and make a run for it

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Hello folks,

Welcome to Social Media and Stock Manipulation 101.

Today, we will take you through the finer nuances of leveraging social media clout, inflating stock prices, fooling unsuspecting and naive retail investors, and ending things with a bang (not a whimper!) as the market regulator follows your trail and the law catches up with you.

In this edition, we will unpack the nitty-gritty of the top-notch stock manipulation precedent set by Manish Mishra and his 44-player nexus that helped him and others pull in handsome (illegal) gains of a whopping Rs 54 crore from two stocks – Sadhna Broadcast and Sharpline Broadcast.

Here's a step-by-step guide to orchestrating a YouTube pump-and-dump con:

If there's anything to learn from Mishra, it is that bringing your A-game every day to work can yield wonderful returns. With your eyes fiercely set on the end goal, you need to have a clear understanding of the risks and costs that the gig will demand before it takes off on its own.

This, obviously, demands steadfastness and commitment and this is where Mishra's dedication shines through.

One can never get enough of a good thing. Taking that maxim to heart, he ran not one, but four YouTube channels. These four channels – with sombre and sincere sounding names such as "The Advisor," "Moneywise," "Profit Yatra" and "Midcap Calls" – had a cumulative viewership of over 50 million.

Mishra understands that to make an omelet, you need to crack some eggs. To score big returns, he put in big money first. From January to September 2022, he paid Rs 4.72 crore to Google AdSense to promote his videos. Even as recently as February 20, these channels were putting out videos with "outlandish claims," irrespective of the Securities and Exchange Board of India (SEBI) enquiry against them.

Professionalism, indeed!

For stock price inflation to take wing, bombastic is the way to go. Plying retail investors with sleep-inducing and jargon-ridden fundamental analysis is destined to be a dud. Instead, go big.

Don't let something as inconvenient as facts and truth stand in the way of big bucks. Stun and overawe with exclusive scoops that no credible, self-respecting news platform will ever write about or air. The folks at SEBI might not agree with your MO, but don't let their party-pooper ways bring you to a halt. Take copious notes from Mishra's book on how to fine-tune your claims. Here are a few examples of his work:

·         "The company has a 5G licence. Sadhna Broadcast is going to be taken over by the Adani group. The margins of the company will increase after the deal."

·         "A big American corporation has entered into a contract for Rs 1,100 crore to produce 4 devotional movies where the money will be brought in by the American investors but the rights will remain with Sadhana Broadcast."

·         "Big mutual funds have already bought the stock."

·         "The company has signed a big contract with Sony Pictures and Zee to create 4 big films and 9 web series. The company will earn approx. Rs 250 crore from this deal. In the said deal, the investment will be done by Sony and Zee, but the content rights are with Sharpline Broadcast Ltd."

Once the ground has been laid for jacking up stock prices with videos, you need to boost the buzz with an accompanying rise in volumes. This, obviously, is not a one-man game. Mishra understood this very well and his work in the two scrips shines a light on how networking can deliver the multiplier effect we all aim for in our careers and business.

From family members to stock brokers to company promoters to actors like Arshad Warsi and his wife, Mishra's network – either through himself or other actors – was spread far and wide. With Mishra as the central node in the larger networking web, the volume and prices of the two stocks started climbing upwards miraculously, demonstrating that no goal is too big when we act with one will and one mind.

The claims dished out in the videos worked like a charm. The trade volumes of Sadhna shares shot up almost sixfold between April and July last year and the share price rose to Rs 12.68 from Rs 2.76 in the same period. However, there was no stopping Mishra's genius. By September, the price hit Rs 33.15.

The same was the case with Sharpline: its share price rose more than sixfold to Rs 53.30 on June 13 from Rs 8.47 on April 19. Trading volumes shot up 5,408 percent.

The numbers speak volumes (pun intended) about Mishra's business acumen. By the end of the mis-adventure, the number of small shareholders in Sadhna with investments up to Rs 2 lakh had gone up to 55,343 from 2,167 individuals. The shareholding of small investors widened to 25.42 percent on September 30 from 3.53 percent on June 30. At the same time, the number of large shareholders – those who invested more than Rs 2 lakh – went down to 14 from 22 and their shareholding narrowed to 25.27 percent from 37.67 percent.

The market regulator chalked out how Mishra and a cohort of volume creators, profit makers, as well as promoters started offloading their shares when the buzz for the two stocks started catching on.

Evidently, one needs to get going before the going gets tough.

Karma has that annoying habit of catching up and Mishra was no exception. For now, SEBI has directed the impounding of gains made by all the players and has barred them from accessing the markets.

They have all been directed to provide SEBI with an inventory of their movable and immovable assets and have been told not to dispose of or sell any of the assets. What a party pooper!

The regulator, of course, will continue cracking down on all such activities.

Undoubtedly, there will be other “visionaries” and “dreamers” out there who will keep inventing smart-alecky ideas to part investors and their hard-earned money. With SEBI hot on their tail, they better be able to run as fast as their scrips can soar.