Stock manipulation in 5 listed cos via bulk SMSes: Sebi issues interim order against 135 entities

The market regulator Sebi in an interim order restrained 135 entities from accessing the securities market till further orders and has issued impounding orders for Rs 126 crore towards wrongful  gains  made  by  such  entities  by  indulging  in  market  manipulations.  The case pertains to an investigation conducted by Sebi into the alleged manipulation of shares of five scrips  namely, Mauria  Udyog  Ltd,  7NR  Retail  Ltd,  Darjeeling  Ropeway  Company Ltd,  GBL  Industries  Ltd and  Vishal  Fabrics  Ltd.

"A show cause notice has been issued to 226 entities including numerous mule accounts, through  the  aforementioned  order  for prima  facie violations  of  SEBI  Act,  1992  and regulations  thereunder  indicating  a  possible requirement  of  disgorgement  of  Rs 143.79 Crore from them," Sebi said.

The modus operandi followed apparently under a pre-planned scheme by the entities mainly centered around circulation of bulk SMSs in five scrips with a 'Buy' recommendation  to  public  investors.  The  scheme  involved  3  major  sets  of  entities namely, PV (Price Volume) influencers, SMS Sender and Off Loaders, apart from using a large number of entities who are apparently mule or conduit entities to operate the  fraudulent  scheme  in  these  scrips. 

As  per  the  first  leg  of  the  scheme, PV Influencers were  found to have increased the price and volume of the five scrips through manipulative trades, followed by circulation of buy recommendations via Bulk SMSs  in  the  five  scrips by  the SMS  sender,  Hanif  Shekh,  who  was prima facie the master mind behind the scheme to induce public investors into buying such scrips.

"In the last leg of the scheme, the Off Loaders sold the shares of these five scrips (previously  acquired  by  them) at elevated  prices  thereby  making substantial profits which were transferred through multiple layers and conduits to the Ultimate Beneficiaries of the scheme who were identified as Promoters of some of the companies and the mastermind of the scheme Hanif Shekh," Sebi said.

Sebi said general public is cautioned to be aware of fraudulent activities being carried out through SMSs, various websites, social media like Telegram, Instagram,  YouTube  and are further advised to deal only with Sebi registered intermediaries.

Sebi said it took numerous steps to investigate the  matter including using  digital footprints, CDRs and voluminous bank transactions to identify the SMS sender and other entities involved in such illegal activities. The action on SEBI’s part has led to discovery of crucial evidence in the matter," it said.

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