How Retail Investors Trapped in Pump & Dump Scam of Cressanda Solutions Ltd.?
Let’s start with the display of one of the screenshots from a YouTube video.
What is the first thought that came into your mind after looking at this image?
That this is some News channel with the name Market Mentor providing details of the stock price and potential growth. Right?
Well, in that case, you are not alone and many might think the same. But let’s be a little realistic.
- CMP: ₹13
- Target Price: ₹260
- % Return: 2000%
Do you think it is true? Do these numbers seem to be realistic?
Well, it is not possible and even if it was, then the company should have a high revenue and profit percentage. But in the case of Cressanda, it was not.
How could we be so sure about that?
Let’s take you on the whole journey of how we came across this scam.
A few days back we received the video link of the channel Market Mantra on our email by one of our subscribers. He mentioned that the stock named Cressanda was being by operators.
We opened the link and saw the video, the screenshot of which is displayed above. Just after a few seconds, we understood that the video mimicked a News channel but was fake.
We then checked the name of the SEBI website to find that was the company registered as RA or IA.
But as expected, found no result.
Then we clicked on the channel. What we found, astonished us, there was not a single published link on that channel.
We again checked the video link and found that it was a link to an Unlisted Video. That means that the operators circulated the link on different social media platforms including Telegram & WhatsApp to manipulate retail traders.
Want to guess the number of views on the video?
It was around 7,80,000 in just 2 days. That was something to be concerned about. We got more worried when we checked the stock price.
The stock price rose by 47% in 5-7 days.
This jump in price was accompanied by huge volume in the range of 50 lakh to 60 lakh per day.
What Were the Major Red Flags that Retail Traders Avoided?
Why did we call it a scam, there might be a possibility that in reality the company was doing good and had a huge growth potential that made investors invest in it.
We had a reason for that as well and all those were the red flags that were being avoided by traders & investors.
The information in the unlisted video stated that the expected profit in the stock price in the next year would be ₹3000 crores-₹4000 crores.
But when we checked the current revenue in the same video, it was ₹66 crores with a profit of ₹10 crores.
Even after that, without considering or checking the whole information, many investors got trapped in such scams, lost their capital, and later blamed the stock market by saying it was a gambling platform.
It is not but blindly following the recommendation without verifying details only leads to unexpected results and disappointments.
After 2 days, we clicked on that link again and found that the video had been removed. Soon after that, we checked the stock movement and as expected found that the stock price started declining.
Operators once again were successful in their objectives and retail traders in greed lost huge capital.
The worst part is that the SEBI could not identify the modus operandi in such cases as the operators using Unlisted Video Link to manipulate the stock price.
Did Stock Brokers Do Anything to Protect Investors?
We checked more details on this stock and came across that BSE had already listed this stock in ESM (Enhance Surveillance Measure) on August 01, 2024, making it mandatory for stock brokers to execute orders of traders only on the availability of 100% margin.
Also, we checked a few trading apps. Stock brokers displayed a warning for retail traders on the buying window of this stock. The information displayed on Zerodha platform was:
Buying tips are circulated on social media to possibly manipulate the price of Cressan BSE. Exercise caution before buying.
So, even if retail traders skip identifying the hidden agenda behind the stock recommendation through such videos, stock brokers and exchange play their role efficiently by displaying a warning.
But again retail traders in greed ended up making wrong decisions and suffered losses later.
How Retail Traders Can Protect Themselves from Such Scams?
The best way to protect yourself from falling into such scams is to identify red flags like those displayed in the case of Cressanda Pump & Dump scam
- Unrealistic Returns
- Huge Jump in Penny Stocks
- Historical Price Trends
- Unlisted Video Links
Further, before investing in any stock in the stock market make sure you check and analyze the company’s growth, technicals, and other parameters yourself instead of following anyone blindly.
The only way to stay safe is to be aware and to gain proper knowledge of trading and investment.
