Market regulator imposed fine in its order 2.84 crore on six persons and barred them from accessing the stock market. As per the SEBI order, these persons were given unsolicited stock recommendations using social media channels- Telegram and Twitter to artificially influence stock prices and make illegal profits.
SEBI has asked individuals to deposit the amount received from such illegal gains in their escrow account. The market regulator has prohibited 6 persons involved from buying, selling or dealing in securities in any manner, directly or indirectly, until further orders. These entities have been found to be in violation of SEBI norms for prevention of fraud and research advisory rules, given that they were giving stock tips without being registered with SEBI.
The market regulator is increasingly taking note of the stock tips being circulated through social media or TV channels by unregistered research analysts. These entities allegedly eliminate stock tips to artificially influence the stock price and make a quick buck as a cost to the broader markets.
In its 37-page order, SEBI said, these entities were involved in the classic pump and dump scheme through Telegram.
These individuals who were actively working through such social media channels were earlier taking up positions (buying shares) in large number of small cap companies; Then sending baseless and fraudulent messages through such social media channels indicating strong potential for immediate price hike in such shares, inciting others to take bullish positions in those shares.
SEBI in its order stated that as a result of the rise in prices, they took the opposite position by selling their previously purchased shares and profited from the trades done under such fraudulent scheme and instrument.
After several complaints, the market regulator had launched an investigation.
SEBI, during its investigation, found that a Telegram channel named – Intraday Calls – “Bull Run Investment Educational Channel” where these so-called stock recommendations were broadcast.
“The alleged scheme to entice and induce others to deal in certain securities, thereby causing an adverse and artificial effect on the price and quantity of those shares, is simplistically devised and implemented in such a way as to that it was an impossible task for ordinary investors to identify. Any suspicious hidden intent behind such messages and suggestions which were being circulated among them through Telegram channel,” the market regulator said in the order.
The channel got 50,000 followers in a very short span of time.
“The number of subscribers/investors in the Telegram channel run by Notice is continuously increasing and undeniably, the number of investors/subscribers for such socials is high.
The higher the percentage of profits made to media channels, the persons indulging in such fraudulent and unfair activities,” said SK Mohanty, whole-time member of SEBI.
Individuals claimed that they were stock market research analysts with more than 40 years of experience. SEBI said in the order that they also falsely claimed that they are in the process of registration of Research Analysts with SEBI.
By virtue of the order, it was said that the persons shall be provided with a complete list of all properties held in their names, individually or jointly, whether movable or immovable, as well as any interest, investment or charge on any such property. it is necessary to do. , including details of all bank accounts, demat accounts and mutual fund investments, within 5 working days of receipt of this order.
“Only on production of proof of deposit of full amount” 2.84 crore either jointly or severally in the escrow account, SEBI will communicate to the banks to defreeze the bank accounts of such persons,” SEBI said.
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