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How ‘guest experts’ pulled off nearly Rs 8 crore gain on Zee Business: SEBI crackdown reveals misleading tactics

SEBI on February 8 took action against 15 experts who appeared on the channel between February 01, 2022, and December 31, 2022 and are said to have made ₹7.41 crore as “unlawful gain” that they made by taking opposite positions in the market than they advised on air.

As per the order, a few of them were directly involved in taking such unlawful trades while others allegedly enabled them. Some have even been barred from trading in the market until further orders, the market regulator said.

How did it all happen?

SEBI Whole Time Member Kamlesh Varshaney, in his order, wrote, “The Noticees have played specific roles at various stages which have, prima facie, been found to be in violation of the SEBI Act and the regulations made thereunder.”

He said that the analysis of evidence gathered during the investigation reveals that guest experts shared advance information on recommendations to be made by them with profit makers, before the broadcast of the recommendations on Zee Business.

Since the profit makers had information beforehand, they took positions in the scrip/contract and reversed the position or squared off the position upon broadcast of the recommendation on the business news channel, the market regulator said. The profit was then shared with guest experts as per prior understanding, the regulator added.

According to Varshney’s order, both experts and the profit makers are jointly and severally liable for impounding the proceeds generated from the trades which are not in conformity with the provisions of securities laws.

“Such joint and several liability is restricted amongst those Noticees who made these unfair profits, who enabled certain Noticee to make unfair profits or whose recommendations led to such unfair profits,” he said.

The guest experts, profit makers and enablers on SEBI’s radar

The market regulator has taken action against Simi Bhaumik, Mudit Goyal Himanshu Gupta, Ashish Kelkar, Kiran Jadhav, Ramawatar Lalchand Chotia, SAAR Securities India Private Limited, Ajaykumar Ramakant Sharma, Rupesh Kumar Matoliya, Nitin Chhalani, Kanhya Trading Company, Manan Sharecom Private Limited, SAAR Commodities Private Limited, Partha Sarathi Dhar and Nirmal Kumar Soni.

SEBI has classified them into three categories — guest experts, profit makers and enablers. Kiran Jadhav, Ashish Kelkar, Himanshu Gupta, Mudit Goyal, and Simi Bhaumik were involved in giving trading advice to viewers, and hence have been bracketed as guest experts. Nirmal Kumar Soni, Partha Sarathi Dhar, SAAR Commodities, Manan Sharecom and Kanhya Trading Company have been termed profit makers and the rest are enablers.

The need to sensitise investors

In its interim order against the experts, SEBI has highlighted that it took the urgent decision as investors’ education is very important and they must be sensitised against falling for such experts.

“There are many experts who are spreading financial literacy in India and empowering investors to make their own decisions…the same cannot be said about a few other experts who take advantage of their mass following to make unfair profits by misguiding innocent investors,” SEBI said.

Thus investors need to exercise due diligence before accepting any free-flowing advice on TV or social media.

SEBI also said that the case under consideration demonstrates a clear scheme of manipulation to harm the interest of investors by misguiding them to take positions in securities so that profit makers could make a profit at the cost of such investors.

It added that the unlawful gains come, directly or indirectly, from the pockets of innocent investors who follow the advice of guest experts unaware of the fraudulent scheme.

Reference: CNBCTV18


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