After the investigation, SEBI found that these individuals were prima facie alleged to have engaged in the acts of devising and implementing a manipulative scheme to make unlawful profits. It also passed an interim order on the matter in January 2022
SEBI on Wednesday barred six individuals from the securities market for up to three years and imposed penalty totalling Rs 5.8 crore on them in a case pertaining to circulating misleading messages recommending buying specific stocks using social media platform Telegram.
The regulator has asked them to pay the fine within 45 days.
In addition, SEBI has also asked them to disgorge ill-gotten gains to the tune of Rs 1.85 crore made by them, along with interest.
The six entities are -- Himanshu Mahendrabhai Patel, Raj Mahendrabhai Patel, Jaydev Zala , Mahendrabhai Bechardas Patel , Kokilaben Mahendrabhai Patel and Avaniben Kirankumar Patel.
In its order, SEBI found that Himanshu, Raj and Jaydev were the administrators of a Telegram channel named -- @bullrun2017 (Bull Run Investment Educational Channel)-- which had more than 49,000 subscribers, and were engaged in dissemination of false and misleading messages recommending specific stocks in the said Telegram channel.
Further, the trio purchased specific stocks using their own trading accounts as well as the trading accounts of Mahendrabhai Bechardas , Kokilaben and Avaniben and then circulated buy recommendation messages for those specific stocks on the Telegram channel, without disclosing their own interest and intent to sell the stocks instead.
Subsequently, contrary to their own recommendations, the entities sold their stocks at inflated prices to unsuspecting investors who had followed their advice, thereby booking unlawful profits.
"The noticee nos. 1, 2 and 3 (Himanshu, Raj and Jaydev)were engaged in dissemination of false and misleading messages recommending buying specific stocks in the Telegram channel and the trading accounts of all the noticees (six individuals) were used to book profits from the resulting impact on price and volume of the recommended scrip," SEBI said in its 55-page final order.
Through such acts, they have made illegal gains to the tune of Rs 2.84 crore collectively. SEBI noted that they have already deposited unlawful gains -- Rs 98.84 lakh-- in an escrow account.
Now, SEBI has directed them to jointly and severally, disgorge the remaining unlawful gains of Rs 1.85 crore, along with simple interest of 12 per cent per annum.
Thus, all the noticees have played their respective roles, which have been found to be a part of a scheme in violation of SEBI Act and PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) Regulation, SEBI added.
Accordingly, the regulator has barred Himanshu, Raj and Jaydev from accessing the securities market and are further prohibited from buying, selling or otherwise dealing in the securities market, directly or indirectly in any manner till expiry of 3 years from the date of payment of disgorgement amount.
The prohibition for Mahendrabhai Bechardas , Kokilaben and Avaniben is one year.
Further, the regulator has levied a penalty totalling Rs 5.68 crore on Himanshu, Raj, and Jaydev and Rs 5 lakh each on Mahendrabhai Bechardas, Kokilaben, and Avaniben.
The order came after the regulator received two complaints in July 2021 and October 2021 alleging that certain entities used the social media platform Telegram, to artificially inflate the stock prices and make illegal profits.
Based on the aforesaid complaints, SEBI initiated an investigation in the present matter against these six persons.
After the investigation, SEBI found that these individuals were prima facie alleged to have engaged in the acts of devising and implementing a manipulative scheme to make unlawful profits. It also passed an interim order on the matter in January 2022.