SEBI | “Pandya ka Sauda” turns out to be the “Aakhri Sauda” for anchor and 5 other entities for the fraudulent trade activity-Ex parte interim order

Securities and Exchange Board of India (SEBI): Madhabi Puri Bach, Whole Time Member, in its ex-parte interim order restrained the anchor and the entities from the securities market,  ordered to square off any such position in any exchange-traded derivate contracts. The Tribunal noted that,

“…under Section 11 (4) (d) of SEBI Act, proceeds of a transaction can be impounded pending investigation. Detailed investigation in the extant matter is pending. Further, as discussed in preceding paragraphs, there is ample, prima facie, evidence which demonstrates that the conduct of the entities is unfair which has prima facie violated the integrity of the market. The discussion in the aforesaid paragraphs has shown that the, prima facie, unfair conduct of the entities has the potential to cause irreparable injury to the securities market. Furthermore, as noted earlier, the balance of convenience dictates that immediate action has to be taken against the entities to prevent further harm to the investors and the securities market. Moreover, the proceeds which have been generated are intrinsically linked to the prima facie unfair conduct of the entities. Hence, appropriate direction needs to be issued in this regard”.

In the pertinent matter through a letter of the National Stock Exchange of India Ltd. (NSEIL), it was brought to light that the trading activity of Alpesh Vasanji Furiya and related entities had a strong correlation of their trades with the recommendations provided by Pradeep Pandya, Markets Editor at CNBC Awaaz on his show Pandya ka Funda. Pradeep Pandya hosted/ co-hosted various shows on CNBC Awaaz and was observed to be giving stock recommendations using tagline “Pandya ka Funda”. He hosted/co-hosted shows such as Pehla Sauda, Aakhri Sauda, 10 Ke Dumdaar Trade. Thereafter, SEBI conducted a preliminary investigation for the period between 01-11-2019, to 13-01-2021. And eventually found a repeated pattern of buying shares in the trading accounts of Alpesh Furiya and connected entities in synchronisation with the recommendations made on the shows hosted by Pradeep Pandya and selling the same immediately after the said recommendation.

 The Tribunal while detailing the 5 issues in the order, found a repeated pattern of fraudulent and unfair trading activity by the entities, for recommending stocks till very recently, mis-utilisation of their position as host/ external expert or by appearing on other shows/ channels/ media giving recommendations/ contributing to any activities related to securities market. It further considered the popularity of the entities on the social media platforms, and although the activities ceased but the possibility of exploiting personal, social and corporate network in the future, and resultantly the impending danger was thought better to be prevented. For the reasons mentioned, the Tribunal taking preventive measure against Pradeep Pandya, Alpesh Furiya, Manish Furiya, Alpa Furiya, Alpesh Furiya HUF and Manish Furiya HUF, from causing any further harm to the market, restricted the entities from the securities market, froze accounts of the entities, impounded the bank accounts to the extent of the amount mentioned, ordered to provide full inventory of all assets. Also directed Pradeep Pandiya and Alpesh Furiya to preserve records of their various social media and to cease and desist from undertaking any activity related to giving investment advice, sell or buy recommendations, publishing of research reports. The Tribunal keeping in mind the unfair dealings and the balance of convenience, opined that,

The balance of convenience is to impose suitable directions against the aforesaid

entities so as to maintain a level playing field in the market for the general investors. If an ex-parte order is passed, what is at stake is right of the current entities herein vis-a-vis multitude of investors in the market. It may be noted that one of the underlying differences between the ex-parte orders in the case of private suits and ex-parte public enforcement actions, is the identification of the injured party. In private damage suits, the injured individual, as “whole”, is identifiable whereas ex-parte public enforcement actions, seek to protect the floating multitude of investing public by preventing, continuous and imminent violations of the securities laws. Further, unfair dealings in the market affects the integrity of the market in its entirety. Therefore, I consider the balance of convenience is also not in favour of the entities.

The Tribunal, very elaborately explained BTST trades in its interim order, where it stated,

“BTST (stands for Buy Today Sell Tomorrow) trades are trades where the investor buys shares on ‘T’ day and sells it on T+1 day i.e., sells before the buy trade is settled, i.e., before the shares are delivered in his demat account and before he makes payment for his purchase of shares. What this means is that, if an investor buys 10 shares of ‘X’ on Monday, the shares will be credited to his demat account only on Wednesday. However, if the share price of the company has increased the next day after he has bought the shares i.e., on Tuesday itself, he can sell the shares on Tuesday itself and make profit even before getting delivery of the shares and before paying for the share”.

[Interim Order in the matter of Mr. Alpesh Furiya, WTM/MB/ISD/ISD_ISD/13676/2021-22, decided on 04-10-2021]


Agatha Shukla, Editorial Assistant has reported this brief.

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