SEBI bars entities from market for two years; imposes Rs.4 crores
They were accused of engaging in fraudulent trading practices
The Securities and Exchange Board of India (SEBI) has banned four entities from the securities market for two years and imposed a combined penalty of Rs.4 crore. for executing trades based on an advance information of stock recommendations by guest experts on a media channel.
In its 55-page order, the market regulator stated, “The debarment period shall be reckoned from the date of the interim order of 8 February 2024.”
SEBI fined SAAR Commodities (Rs.2 crores), Manan Sharecom (Rs.75 lakh), Kanhya Trading Company (Rs.75 lakh) and Partha Sarathi Dhar (Rs.50 lakh).
The market watchdog’s investigation noted that stock tips were pre-shared with select entities, giving them an unfair advantage over public investors. These entities placed trades in advance and booked profits once the stock prices moved following the televised tips. The evidence collected included WhatsApp chats, trading patterns and profit-sharing arrangements.
SEBI claimed, “The scheme created systematic information asymmetry whereby gullible investors were induced to trade based on a guest expert’s recommendation. The public remained unaware that the information/recommendations had been pre-shared with other entities. In the process, investors became victims of deliberate information asymmetry.”
The scheme resulted in unlawful gains of Rs.7.41 crore, which have been disgorged as part of the settlement proceedings.
The regulator said that by indulging in such trades, the entities violated provisions of the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) norms.
It added, “Besides being debarred from accessing the securities market, the entities are prohibited from buying, selling and dealing in the securities market, directly or indirectly, in any manner, for two years.”
However, proceedings against Himanshu Gupta, one of the guest experts, were closed with no penalty, as no direct involvement was established.