Sebi crackdown on fake Telegram channels; Rs 5.7 crore penalty on 3 entities for ‘pump & dump’ stock tips
April 27, 2023
Sebi noted that the Telegram channel administrators bought stocks for themselves, then recommended them to followers to ‘buy’ those, and then sold the same at higher prices, making enormous illegal profits.
Markets regulator Sebi has barred three entities from accessing the securities market in relation to a fake Telegram channel that was used to give stock-specific recommendations to subscribers. It has imposed a penalty of twice the amount made in unlawful gains — Rs 5.68 crore — on three entities, and Rs 5 lakh on the remaining three for violations on their part. In an order on Wednesday, the regulator named six individuals, of whom three were the administrators of the fake channel named “@bullrun2017 (Bull Run Investment Educational Channel”, which had over 49,000 subscribers.
They were responsible for running a ‘pump and dump’ scheme, known as scalping — which has been defined by the US SEC as “recommending a stock to drive up the share price and then selling shares at inflated prices to generate profits.” During its earlier investigation, Sebi had noted that the administrators had bought particular stocks using their own trading accounts as well as that of their family members before recommending them to followers to “buy” the stock without declaring their own stakes in it. They sold the equities at inflated prices as a result, making enormous illegal profits.
According to calculations, the entities had raked up Rs 2.84 crore in unlawful gains and were earlier directed to deposit the same in an escrow account. However, only `9.8 crore had been deposited. Consequently, the regulator has barred the first three entities from the securities market for a period of three years, and the remaining three people for a period of one year from the date of disgorgement of the entire amount. It has directed the guilty parties to pay up the remaining amount, along with interest at 12%.
[The Financial Express]
