Sebi bans 15 individuals from securities markets for 3 years; slaps Rs 3.6 cr penalty

Sebi on Thursday barred 15 individuals from securities markets for three years and imposed a total penalty of Rs 3.6 crore for manipulating shares of Unison Metals through misleading stock recommendations circulated on telegram channels.

In addition, the regulator directed 10 individuals to disgorge an unlawful gain of over Rs 3.87 crore, which is to be credited to the Sebi's Investor Protection and Education Fund within 45 days.

Sebi also slapped the fine in the range of Rs 10 lakh to Rs 1 crore on 15 individuals for flouting various regulatory norms.

In its 98-page order, Sebi found that Yayaati Hasmukhray Nada, Nirali Nada, Jasavantbhai Patel, Jignesh Pravinbhai Pethani, Nahush Ashvinbhai Shukla, Prajesh A Shukla, Reetaben Ashvinkumar Shukla and Hardik J Patel are closely connected.

"The noticee no 1 (Yayaati) was taking investment decisions on behalf of noticee nos. 2, 6, 7 and 9 (Nirali, Nahush, Prajesh and Reetaben) and was also advising noticee no 4 (Jignesh) on his trades. Noticee no 1 therefore played a pivotal role in the manipulative scheme.

"Further, the scheme could not have taken place without noticee no 12 and 13 (Jalaj Agrawal and Arvind Shukla) who played a crucial role in disseminating the recommendations in the scrip of UML, thereby attracting investors in the scrip," Sebi's whole time member Amarjeet Singh said in the order.

Jalaj was instrumental in directing the price at which the recommendations in the scrip should be posted by Arvind Shukla. Shailesh S Patel was the link between the enablers and noticee no 12. He also sold the shares of UML held by his son Malay Patel, as per the order.

According to Sebi, the net sellers, profit makers, beneficiaries took unfair advantage of the artificially created price, volume spurt, and executed their orders at a higher price and earning unlawful profits worth over Rs 3.87 crore.

Sebi also found that Tirth Mehta, Uttamchand Chandanmal Mehta (UML's promoters) and Sharad Ramkrishana Gattani bridged the connection between the net sellers, profit makers, beneficiaries and operators, and provided vital information in the form of Benpos and shareholding data.

The regulator also noted that Jalaj and Arvind are serial offenders, and had carried out 'pump and dump' operations by employing similar modus operandi of misusing social media to disseminate stock recommendations.

The case stemmed from complaints received by Sebi in December 2021 about suspicious stock tips urging investors to buy Unison Metals Ltd (UML) shares.