Securities Exchange Board of India (SEBI) has issued an interim order and a show cause notice to Kiran Jadhav, Ashish Kelkar, Himanshu Gupta, Mudit Goyal, and Simi Bhaumik for manipulating the market, unfair trade practices, and defrauding investors, and other regulatory violations. These individuals allegedly used their privilege of being telecast on the Zee Business TV channel as 'guest experts' to conduct illegal activities that violated multiple SEBI regulations.
These so-called 'experts' of the stock market had allegedly teamed up with traders to illegally profit from the recommendations they were making on the Zee Business channel. SEBI investigations reveal that the unlawful gains from the nexus between these 'guest experts’ and other parties who profited from their unlawful practices amounted to ₹7.41 crore in less than a year, from February 1, 2022, till December 31, 2022. After more than a year of observing their activities, these individuals have been pronounced as guilty after investigation by the regulator.
Modus operandi of the criminal enterprise
All the five offenders were appearing on Zee Business in their own branded shows. Kiran Jadhav and Ashish Kelkar provided stock recommendations under the tagline "Kiran Ka Kamal". Himanshu Gupta broadcast as "Hitman Himanshu". Mudit Goyal was not even a SEBI registered Research Analyst, but he provided stock recommendations under the tagline "Mudit Ke Munafe". Simi Bhaumik had a show called "Simi Ke Non Stop Shares".
During this time, a trader, Nirmal Kumar Soni, approached them with a scheme. The 'Guest experts' would share information about the recommendations they were going to make on TV to Soni who would then trade beforehand on those recommendations and make profits when the rest of the investors started following the recommendations. Soni promised share of profits from such trades to these so-called Experts.
Soni used the advance information of stock recommendations made by these 'experts' to trade on the accounts of SAAR Commodities Private Limited, Manan Sharecom Private Limited and Kanhya Trading Company. Nitin Chhalani of Kanhya Trading, Rupesh Kumar Matoliya, Ajaykumar Ramakant Sharma, and Ramawatar Lalchand Chotia of SAAR Commodities, along with the mentioned companies have also been charged of aiding and abetting the crime.
Simi Bhaumik turns out to be the greediest of the 'guest experts' as she was not only limited to pocketing the illicit profits shared by Soni. Simi indulged her husband, Pratha Sarathi Dhar in trading on the same lines as Soni and the duo made even more illegal profits.
All the five offenders, Kiran Jadhav, Ashish Kelkar, Himanshu Gupta, Mudit Goyal, and Simi Bhaumik were sharing the advance information about recommendations they would make on the television channel, which in turn was shared with Soni and Simi's husband, Partha Sarathi.
The entire operations involved using multiple phone numbers, SIMs registered under other names, using false names in the phone address book to conceal the identity of co-offenders, coded messages, and cryptic communication. The concerted moves of the five 'guest experts' made in tandem with Soni and Partha Sarathi indicate that the entire operation was being run like a sustained and premeditated racket rather than just going morally astray due to short-term temptation.
SEBI has, so far, only issued directions to the offenders to disgorge an amount equivalent to the unlawful profits, with interest; refrain from accessing the securities market; prohibiting offenders from buying, selling, or otherwise dealing in securities for an appropriate period; refrained the registered RAs from undertaking any activity relating to research advisory.
The lacunae in the system that creates white-collar criminals
One does not need to be a SEBI registered financial adviser or research analyst to make public recommendations about stocks. However, strangely, Zee Business hired an unregistered entity, Mudit Goyal, to be an 'expert guest' on their channel in the first place.
Moreover, the laws for registered entities who make public recommendations are not any more stringent than the laws that govern those who do not make public appearances. In the current times when the ecosystem is rife with self-proclaimed experts who spout recommendations to millions on television and the social media, it appears there is a need for regulations that stem the rot of corruption in stock market advisory more effectively.
It took more than a year for SEBI to bring these individuals to justice. And there may be many more such activities going un-noticed because of the proliferation of finfluencers (financial influencers on social media). Stricter regulations even with respect to public recommendations need to be introduced to prevent market manipulation and defrauding the average investor because it is impossible to track the recommendations and subsequent stock movements related to the gargantuan populace of finfluencers who have mushroomed in the market these days.
With 14 crore Demat accounts and growing, it may be time for the regulator SEBI to put up more stringent requirements to qualify as a 'guest' or 'expert' on television channels and digital media platforms. And further regulations may be required for such 'experts' to prevent them and their kith and kins to profit from front-running or insider trading. When such conditions can be imposed on registered financial advisers, it is valid to ask these entities who can influence decisions of millions of investors to also be bound by the same moral and legal codes.
Despite serial market manipulation for 11 months by abusing a public platform and allegedly defrauding the investors for a long period of time intentionally and with concerted criminal efforts it is ironic that they are not behind bars and they can get away with disgorgement of unlawful gains and being barred from accessing stock markets. Even though their crimes have been proven, point no. 177 of the Interim Order of SEBI reads Notices Nos. 1 to 5 and 11 to 15 are further called upon to show cause as to why appropriate penalty under Section 11B(2) and 11(4A) read with Section 15HA of SEBI Act, 1992 should not be imposed on them for the alleged violations of SEBI Act, 1992 and PFUTP Regulations, as the case may be.
This essentially means that the case is still going on, and the profiteers, Nirmal Soni, Simi's husband, Partha Sarathi, the trading companies, and the so called ‘experts’, Kiran Jadhav, Ashish Kelkar, Himanshu Gupta, Mudit Goyal, and Simi Bhaumik are being given an opportunity to present their case against a penalty of about ₹22.2 crores, three times the amount of their illicit profit, payable by them under section 15HA of the SEBI Act.
This may be the time that such offenders get treated in a manner that sets an example for winning the confidence of the investor community and create a deterrent for those who distort market dynamics by abusing public platforms.