The Securities and Exchange Board of India (SEBI) has levied a fine of more than INR 5.83 Cr on as many as three administrators of a Telegram channel involved in stock manipulation, along with three other entities concerned. The market regulator has imposed a fine of INR 5.68 Cr on the three main accused while the other three were penalized INR 5 Lakh each.
The accused individuals – Himanshu Mahendrabhai Patel, Raj Mahendrabhai Patel, Jaydev Zala, Mahendrabhai Bechardas Patel, Kokilaben Mahendrabhai Patel and Avaniben Kirankumar Patel – have been directed by SEBI to deposit the penalty within the next 45 days. The three main accused have also been barred from the capital markets for a period of three years, while the remaining three have been prohibited from participating in the markets for a year. During the period, the existing holding of securities of these entities will remain frozen.
The SEBI order also mandated the five persons to disgorge ill-gotten gains to the tune of INR 1.85 Cr, along with 12% interest. The modus operandi of the alleged culprits was that the three main accused ran a Telegram channel – ‘@bullrun2017 (Bull Run Investment Educational Channel) – which had more than 49,000 subscribers. As per the market regulator, the main accused would first use their trading accounts as well as their family members, who were co-accused, to buy the shares of certain companies. The admins would then circulate messages of those specific scrips through the Telegram channel.
After luring hundreds of customers, the accused would then dump their old stock in the market at higher rates, thereby ‘booking unlawful profits’. The market regulator also noted that the Telegram channel, in question, allowed only one-way communication, ensuring that only admins could post messages while subscribers could only read such messages.
The scam came to light after SEBI received two complaints between July and October 2021, alleging that the admins of the Telegram channel were using their reach of thousands of subscribers to artificially inflate stock prices and make illegal profits. Afterward, SEBI initiated a probe against the six accused and found that these individuals allegedly devised and implemented manipulative schemes to make unlawful profits.
The SEBI order has sent a strong message to the market that such manipulative practices will not be tolerated, and stringent actions will be taken against those involved in such practices. The SEBI has been taking several steps to protect investors and safeguard the integrity of the securities market. It has also been working towards increasing transparency and accountability in the financial sector to protect the interests of the investors.