Securities Exchange Board of India (SEBI): SK Mohanty, Whole Time Member, while acting immediately on the matter, was of the opinion that the Noticees were liable to be held jointly and severally responsible for active collusion, for the unlawful gain through illicit means. And further directed to disgorge the amount so gained, while restricting them from the securities market for an appropriate period.
In the instant matter it was alleged and was further established through investigation that the Noticees were the administrators of a telegram channel where they potrayed themselves to be experienced analysts and researchers, further inducing and manipulating investors. The features of the telegram of sending bulk messages were successfully misused for ‘illicit activities like manipulating the stock prices by repeatedly sending unfounded stock recommendations’. The same was advertised through facebook (Meta) and WhatsApp, resulting in members in thousand digits.
The description on the Telegram Channel was:
“We are team of 4 Research Analysts with combined experience of 40 years. All calls are for study purpose only. Taking any trade consultant your financial advisor. We are in the process of getting SEBI Research Analyst Registration.”
The Tribunal was very blatant in its approach towards the Noticees, when it said,
“The tips circulated through the Channel create an inducing impact which are then followed by the subscribers and ironically, such stock tips may also prove to be true, if large number of recipients of such tips believe it and collectively act on it. Slowly and gradually, after seeing the price of the said thinly traded scrip actually rising, more and more subscribers start believing in the tips and start acting on it, which further strengthens the belief of such tips being genuine, as large number of individuals end up acting on such tips and by their collective buying actions, convert the deceitful, specious and baseless tips to realty”… “Such collective belief by the large base of subscribers of the channel in the stock recommendations given by the Noticees would lead to a bull run in the said scrips and propel the scrip price/volume upwards, ultimately giving a golden opportunity to the Noticees to make unlawful profits by selling their shares in the same scrip”.
The concerns of the Tribunal came out in such words:
“…Such dubious acts of the Noticees are quite alarming hence, it becomes imperative to act immediately and restrain them from perpetuating such fraudulent activities in the securities market through any other scheme and in any other manner thereby further threatening the integrity of the securities market.”
“…Nevertheless, SEBI being entrusted with the mandate of protecting the interest of the investors cannot be a mute spectator irrespective of the technology used by the delinquents and such delinquents need to be kept out of the walls of the securities market”.
“…b) The alleged scheme of enticing and inducing others to deal in certain securities thereby creating adverse and artificial impact on the price and volume of those scrips, has been ingenuously crafted and implemented in a manner that it was an impossible task for the common investors to identify any dubious hidden intent behind such messages and tips that were being circulated amongst them through the Telegram Channel”.
Resultantly, the Tribunal restricted all the Noticees from the securities market, impounded banks accounts of the Noticees jointly and severally and directed to open an escrow amount to deposit the amount.[Stock Recommendations using Social Media Channel (Telegram), re, WTM/SKM/54/201-22, decided on 12-1-2022]