SEBI bars 6 persons for stock manipulation using Telegram

Market regulator Securities Exchange Board of India (SEBI) has barred six individuals from securities market and also imposed a penalty of Rs 5.68 crore for spreading manipulative information via Telegram application.

According to the SEBI, it had received two complaints against the Telegram channel 'Bullrun2017' in 2021 who had more than 49,000 subscribers and the above-mentioned individuals were alleged to operate the said channel on Telegram to artificially inflate the stock prices and make illegal profits.

Names of 6 individuals are:

Himanshu Mahendrabhai Patel 

Raj Mahendrabhai Patel

Jaydev Zala  

Mahendrabhai Bechardas Patel  

Kokilaben Mahendrabhai Patel  

Avaniben Kirankumar Patel  

Noticee nos. 1, 2 and 3 are hereby restrained 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 whatsoever, from the date of this Order, till expiry of 3 years.

Noticee nos. 4, 5 and 6 are hereby restrained 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 whatsoever, from the date of this Order, till expiry of 1 year.

While releasing its final order in the matter on Wednesday, SEBI said ,"The examination of the trades executed by the Noticees revealed that they used their trading accounts to first buy the shares of the concerned companies, followed by making buy recommendations with respect to those scrips through the Telegram channel so as to induce thousands of subscribers to deal in those scrips and eventually, after making such recommendations to the subscribers, Noticees used to sell the shares in the market accumulated by them in the first leg of transaction for a profit."

The Telegram Channel provided recommendations to its subscribers for trading in both Cash as well as Derivatives segments, for both intra-day as well as positional trades. The recommendations issued with respect to the cash segment were majorly focused on small cap scrips. The said Telegram channel allowed only one-way communication from the administrators of the channel who post messages while the subscribers can only view such messages, SEBI said.

"A mere disclaimer in the Telegram Channel description, amidst the aforesaid false claims, stating that the subscribers should consult their financial advisor, does not exonerate them from the nefarious scheme deployed through which large sums of unlawful profits have been generated by them, without disclosure of their own interest in the scrips,” Sebi noted in the order," SEBI order reads.

The final order was issued for violations of sections 11 (1), 11 (4), 11 (4A), 11B (1) and 11B (2) of the Securities and Exchange Board of India Act, 1992.