ROSY SMS scam...

So Guys, am back to my blog with the thing I learnt today.

This was shared by one of my friends and I think it really makes sense to know such stuff.
Itz about stocks....the equity market and even if u guys ain't that interested, am sure this knowledge won't go waste...

Herez a classic example of legal stock scam which many of the listed companies carry out and move around without any damages.

Hordes of innocent Investors are trapped in such scams everyday.

The Modus Operandi:


XYZ Stock Traded @ 100 Level On the stock Exchange With a Low Volume.
Share Capital                     : 50 Lacs Shares.
Operator/Owner Holding     : 47.50 Lacs Shares
Public Holding                    : 2.5 Lac Shares

This particular stock always moves in a narrow range daily @ 100 - 110 with hardly any movement.We never hear any News About Such Stock Because Of the Low Public Holding.


Now The promoter/Owner Of the company who want to Exit From Such a Stock would be required To Create Some Volume In the Stock trading.
As the history goes, Stock Split Is Best Way Of Creating Volume.

The Company Announces Stock Split.

Split In The Ratio Of 10 : 1
After Split Share Capital             : 5 Crore Shares
After Split Operator/Owner Hold : 4.75 Crore Shares
Public Holding                            : 25 Lac Shares

After Split Stock Trades @ 10 - 12 Rs. Range For Quite Some Time.

Now the Real Game Begins

After Stock Split, the promoter first Moves the Stock Price from 10 To 14 in a few Trading Sessions Just to Attract Investors.{ Its a Very Easy task As the promoter/Owner Holds Almost 95% Of Share Capital}
After Hitting 2 - 3 Upper Circuit's Almost All Traders/Investors Are Talking about this stock and are attracted.

This time the Price would be Hovering Around 15 - 16 For a couple of Trading Sessions.

Now the promoter/owner purchases Bulk SMS From the Provider who are Easily Available On the Net.
The Rate Of BULK SMS Is Around 0.03 Paisa Per SMS.
If Operator Purchases 1 Crore SMS From the SMS Provider Then Its Cost Would Be Around

10000000 * 0.03 = 3 Lacs

After Purchasing BULK SMS Service. they Collect Mobile # Data Of Stock Traders and Investors and Demat account holders which again is easily available.
Once they are ready with the data, they create a Very rosy SMS Suggesting  a strong BUY CALL ON XYZ Stock.

Example Of SMS :

BUY BUY BUY XYZLTD. @ MARKET PRICE Of 16 Target In 1 Month Is 30.
Once in a lifetime opportunity... Dont Miss The Stock.
BUY in Small Quantity Of 300 - 500 Shares , Dont Miss The Opportunity.

Sender : TM - ***** , AD - *****
{ Sender Is Always Unknown }

They Send This To Almost 25 Lacs investors.

And Then IN Next 3 - 4 Trading Days the promoters Send the Same SMS To Those Mobile User 3 - 4 Times.
25 Lacs Users * 4 Times Same Sms = 1 Crore SMS { Which was Purchased From Web SMS Services }

Some Rough Calculation :

Stock Operator Sent Rosy SMS To 25 Lacs User { 4 Times }

1. Only 70 % Mobile User Read The SMS.Rest 30% Deleted Without Reading.
2500000 * 70 % = 1750000  No. Of Users Who Read SMS = 17.50 Lacs

2. Only 25% Is Stock Traders/Investors From Those are interested( 17.50 Users )
1750000 * 25 % = 437500 Users


3. Only 30% From Interested Users  BUY this Stock.
No. Of Users Who May BUY : 437500 * 30 = 131250 Users


Usually the Investors After Reading Such SMS BUY Only 300 - 400 Shares.They Think of Taking A Small Risk.As a human nature, everyone Is Greedy and Wants To Double Money In a Short time
Usually Experienced Traders/Investors Also BUY As They Think "Zero Bhi Ho Gaya To Bhi Koi Vanda Nahi Hai" in the typical investors lingo..
In Greed Almost All Such Users Buy Small Quantity Of 100 - 500 Shares.
( Median Of Buying Qty Is Around 350 Shares }

Calculation Of Investors/Traders Who Bought Because Of the SMS :

131250 ( USERS ) * 350 ( Median Share Quantity ) = 45937500
{ Almost 4.50 Crore Shares }

Interesting Calculation
After Split Share Capital Of Company   : 5 Crore Shares

After Split Operator/Owner Holding     : 4.75 Crore Shares
After Split Public Holding                    : 25 Lac Shares


Effect of the ROSY SMS Scam

Operator/Owner Holding    :25 Lacs Shares
Public Holding                   :4.5 Crore Shares


After That Stock Price daily Comes Down n Down n Down n Down....since there are no more buyers for the stock!!

BEWARE ! of such Scams!