Securities and Exchange Board of India

10.03.2022

Capital Market

SEBI conducts search and seizure operations in multiple locations across country

MANU/SPRL/0007/2022

In continuation of its efforts to unearth market misconduct, Securities and Exchange Board of India (SEBI), today, carried out search and seizure operations at the premises of 7 individuals and 1 corporate entity at multiple locations in Ahmedabad & Bhavnagar in Gujarat, Neemuch in Madhya Pradesh, Delhi, and Mumbai. During the Search and Seizure operations, SEBI Officials seized various records and documents including 34 Mobile Phones, 6 Laptops, 4 Desktops, 4 Tablets, 2 Hard Drive Disks and 1 Pen Drive from the custody of these persons. These entities are reportedly operating 9 Telegram channels with more than 5 million subscribers to whom they were making recommendations on selected listed scrips. Such recommendations induced the investors to deal in the said scrips, thereby creating artificial volume and price rise. This provided opportunity to their linked entities to off-load their shares at higher prices and make significant profits at the cost of unsuspecting retail investors. The data, emails and other documents are being retrieved from the seized devices and a detailed investigation is in progress.

SEBI had received information that messages containing stock tips and other investment advice with respect to selected listed companies are being widely circulated through websites and social media platforms, such as, Telegram, Facebook, WhatsApp, Instagram, etc. Perpetrators of such fraud use various marketing techniques to attract subscribers on their social media channels.

SEBI has been undertaking several campaigns including Press Releases to educate the investors to be vigilant while taking investment decisions based on stock tips. In the past, it was noticed that through Bulk SMS, investors were induced to invest in or purchase the stocks of certain listed companies. In this regard, SEBI collaborated with the Telecom Regulatory Authority of India (TRAI) to reduce the vulnerability of the securities market to manipulation through misuse of mass communication medium like Bulk SMS. However, the perpetrators of such frauds are now adopting new methods and technologies to defraud the investors.

Earlier also SEBI Officials had conducted a search and seizure operation on December 01, 2021 in the premises of certain persons carrying out similar manipulative activities through Telegram channels. Pursuant to that, vide Order dated January 12, 2022 SEBI established that the administrators of a Telegram channel having a large subscriber base enticed the subscribers to act upon recommendations that were circulated by those administrators on the channel, leading to significant price and volume impact in various scrips. These administrators had built substantial positions in these scrips prior to the circulation of recommendations and offloaded their positions subsequent to rise in price of these scrips making significant profits at the expense of unsuspecting investors.

In this backdrop, SEBI, once again, cautions investors not to rely on such investment tips / advice received through social media platforms. It is also advised that investors should exercise utmost caution while taking investment decisions while dealing in the securities market.

Tags : Search Seizure operations Multiple locations

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