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Market regulator SEBI, in an interim order, has asked several guest experts who appeared on Zee Business news channel to pay back “illegal gains” worth Rs 741 crore that they made by taking positions opposite to those they advised on air.
Action has been taken against 15 professionals who appeared on the channel between February 1, 2022 and December 31, 2022. Some of them were directly involved in illegal trading while others were abetting it. Some of them have been barred from trading in the market till further orders, SEBI said in its February 8 order.
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They include Simi Bhowmik, Mudit Goyal Himanshu Gupta, Ashish Kelkar, Kiran Jadhav, Ramawatar Lalchand Chotia, SAAR Securities India Private Limited, Ajaykumar Ramakant Sharma, Rupesh Kumar Matliya, Nitin Charani, Kanhiya Trading Company, Manan Sharecom Private Limited, SAAR Commodities Private Limited, Partha Sarathi Dhar and Nirmal Kumar Soni.
SEBI categorised them under three categories. Kiran Jadhav, Ashish Kelkar, Himanshu Gupta, Mudit Goyal and Simi Bhaumik were categorised as guest experts as they were providing trading advice to the audience. Nirmal Kumar Soni, Partha Sarathi Dhar, SAAR Commodities, Manan Sharecom and Kanhya Trading Company were termed as profit generators and the rest as advocates.
Method
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“We note that the notified persons have played specific roles at various stages and prima facie, it has been found to have violated the SEBI Act and regulations made thereunder. Analysis of the evidence collected in the course of investigation reveals that the guest experts had shared advance information regarding the recommendations to be made by them with Profit Makers prior to the airing of the recommendations on Zee Business,” SEBI standing commissioner Kamlesh Varshani said in the order.
According to the market regulator, the profit generators received the information, took positions in the stocks/contracts and reversed or closed their positions after the airing of the recommendations on Zee Business. The profits were then distributed to the guest experts as per the prior agreement.
“I find that notified persons are jointly liable for the withholding of proceeds arising from transactions that do not comply with the provisions of the Securities Act as set out in the table below. Such joint liability is limited to notified persons who obtained these unjust advantages, notified persons who enabled particular notified persons to obtain unjust advantages or notified persons who made recommendations leading to such unjust advantages,” Varshani said.
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The need for education
He said an urgent decision was necessary in this case as investor education is crucial to ensure that investors are not misled by such professionals.
“There are many professionals in India who are promoting financial literacy and empowering investors to take their own decisions. However, the same cannot be said for a few professionals who use their large following to mislead innocent investors and derive undue advantages,” SEBI said.
It is therefore important that investors do their due diligence before accepting any advice that flows freely on television or social media.
“The facts of the case point to a clear manipulative scheme to prejudice the interests of investors by misleading them into taking positions in securities and allowing the profit-seekers to derive benefits at the expense of investors. The illicit benefits gained by these profit-seekers have directly or indirectly come from the pockets of innocent investors who followed the advice of guest experts unaware of the fraudulent scheme,” SEBI said.
