SEBI bans two entities for illegal stock tips via Telegram, imposes Rs 5 lakh fine each

SEBI market ban news: India's market regulator, the Securities and Exchange Board of India (SEBI), has taken strict action against two entities, Hanif Kasambhai Shekh and Robert Resources Ltd, barring them from participating in the markets for a period of one year. This decision follows their involvement in manipulative trading activities through a Telegram channel, where stock-specific recommendations were provided to subscribers.

Additionally, SEBI has directed Shekh and Robert Resources Ltd (RRL) to jointly and severally disgorge the total unlawful gains of Rs 28.80 lakh, along with 12 per cent interest per annum from February 18, 2022, until the date of the last fraudulent trade.

The regulatory action stemmed from an investigation initiated by SEBI into suspected pump-and-dump schemes involving stocks promoted through a Telegram channel named 'Safebulls,' following a complaint dated September 30, 2021.

The complaint alleged that the administrators of the 'Safebulls' channel were engaging in fraudulent activities by inflating the prices of various stocks and then offloading them to unsuspecting retail investors.

The investigation, covering the period from January 2021 to March 2022, aimed to determine whether 'Safebulls' violated the provisions of SEBI's Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) norms.

In a comprehensive 26-page order, SEBI's Chief General Manager, Anitha Anoop, highlighted, "I note that the Noticee 1 (Hanif Kasambhai Shekh) engaged in dissemination of manipulative messages recommending buying specific stocks on the Telegram channel and the trading account of Noticee 2 (RRL) was used to book profits from the resulting impact on price and volume of the recommended scrip." She further said both entities were part of the scheme found to be in contravention of PFUTP rules.

The notices accrued wrongful gains amounting to Rs 28.80 lakh through their illicit activities.

"I observe that the Noticees 1 (Shekh) and 2 (RRL), by employing a manipulative scheme, have acted fraudulently and have violated the PFUTP regulations that prohibit manipulative, deceptive or fraudulent schemes/practices when dealing in securities," Anoop remarked.

Consequently, SEBI has imposed a penalty of Rs 5 lakh each on both Shekh and Robert Resources Ltd. The penalty is to be paid jointly and severally.

This regulatory intervention underscores SEBI's commitment to maintaining the integrity and fairness of India's financial markets, and serves as a warning to those engaging in illicit activities aimed at manipulating stock prices and defrauding investors.

(With Reuters inputs.)