SEBI bars 6 individuals, imposes ₹5.68 cr penalty for making false stock tips

Capital markets regulator SEBI (Securities and Exchange Board of India) has barred six individuals from accessing the securities market after enquiring about a fake Telegram channel, which artificially inflated the stock prices and made illegal profits by making false recommendations.

The regulator has issued orders against six noticees, Himanshu Mahendrabhai Patel, Raj Mahendrabhai Patel, Jaydev Zala, Mahendrabhai Bechardas Patel, Kokilaben Mahendrabhai Patel, and Avaniben Kirankumar Patel, asking three of them to pay ₹5.68 crore penalty. At the same time, the rest have to pay ₹5 lakh for these violations.

The probe was launched after SEBI received two undated complaints on July 30, 2021, and October 11, 2021. In its enquiry, SEBI found that these noticees were jointly and severally liable for the proceeds allegedly unlawfully earned by them by carrying out the alleged fraudulent scheme.

Accordingly, the Noticees were directed to deposit an amount of ₹2,84,29,948, which was prima facie alleged to be the proceeds unlawfully earned by them, in an escrow account. They partially agreed with the order and submitted ₹98.8 lakh in an escrow account.

The SEBI probe found that the Telegram channel allowed only one-way communication from the administrators of the channel who post messages, while the subscribers could only view such messages. The number of subscribers of the Telegram channel was gradually increasing and the channel had more than 49,000 subscribers as on January 12, 2022.

Three of these persons were administrators of a Telegram channel called "@bullrun2017 (Bull Run Investment Educational Channel”, which had a total subscriber base of 49,000. They were allegedly involved in ‘pump and dump’, also known as scalping, which is defined as profiting off of small fluctuations in stock prices.

"Noticee nos. 1 (Himanshu Mahendrabhai Patel), 2 (Raj Mahendrabhai Patel) and 3 (Jaydev Zala) 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 from the date of payment of disgorgement amount," said the SEBI order.

The rest of the three have been restrained from accessing the securities market. They are further prohibited from buying, selling or otherwise dealing in the securities market, directly or indirectly in any manner whatsoever, for 1 year from the date of payment of the disgorgement amount.

The noticees are directed to pay their respective penalties within a period of 45 days, from the date of receipt of this order, through an online payment facility available on the website of SEBI.

The banks where noticees are holding bank accounts, individually or jointly, are directed that no debit will be made, except for e-payment in favour of “Securities and Exchange Board of India” as mentioned above, till further instructions from SEBI. However, credits, if any, into the accounts of the noticees may be allowed.

The depositories are directed to ensure that no debits or credits are made in the demat accounts of the noticees, held individually or jointly, without the permission of SEBI.