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SEBI Action On Pump And Dump Stock: Market regulator SEBI has taken major action in the matter of manipulation and irregularities in five stocks. The market regulator has banned 221 entities, including investor Hanif Shaikh, from trading in the securities market for two to seven years. SEBI has also imposed a fine of Rs 10 crore on Hanif Shaikh. This action has been taken regarding large-scale manipulation in five stocks from 2017 to 2020.

According to the final order issued by SEBI on Tuesday, Hanif Shaikh has been described as the mastermind of this entire network. The companies associated with it also have a role in this manipulation of shares. The companies whose shares have been affected include shares of Maurya Udyog Limited, 7NR Retail, Darjeeling Ropeway Company, GBL Industries and Vishal Fabrics Limited.

What did SEBI say in its order?

In the 394-page order issued by the market regulator, it has been said that Sheikh had prepared a complete plan of a fraud. More than 200 institutions were involved in this fraud scheme. These organizations are ‘PV Influencer’, ‘Collaborator’ Or they worked as offloaders and transferred the money earned through illegal means to the promoters of the companies or to the entities controlled by the Sheikh.

‘Pump and Dump’ illegal earnings from

In its order, SEBI has said that the prices of shares of these five companies and the trading in them have been artificially increased. In this entire fraud scheme, some people first got together and traded the shares under planning, so that a message could be given to the market that there is more demand for these shares. Apart from this, common investors of the stock market were advised to buy these shares by sending SMS.

When demand for these shares increased after purchases by common investors, share prices increased. This ‘Pump and Dump’ scheme Through this he made a lot of illegal money. Many mediums (Conduit Entities) were used to hide this money, so that it could be hidden where the money ultimately reached.

226 institutions involved in misappropriation

market regulator Amarjeet Singh, full-time member, said in his order that the case of rigging of shares is not new, but it was carried out on a very systematic and industrial level. 226 institutions were operating this entire network under their respective plans in five different shares. The money transfer process was made so long that it could not be ascertained where the money was finally reaching. Such incidents happening in the securities market are raising serious questions on the confidence of common investors and the transparency of the stock market.

Hanif Shaikh fined Rs 10 crore

As soon as this matter came to light, SEBI arrested Hanif Shaikh. security market Investment has been banned for seven years and a fine of Rs 10 crore has been imposed on him. Apart from this, a six-year ban has also been imposed on all the companies associated with Sheikh and a penalty of Rs 2 crore has been imposed on each company. Other accused involved in this case have also been ordered to stay away from the market for five years. A fine ranging from Rs 5 lakh to Rs 1 crore has also been imposed on other accused.

Order to return Rs 143 crore

The market regulator has said that ‘pump and dump’ Illegal earnings of about Rs 143.79 crore have been made from this scam. SEBI has ordered all the concerned institutions to return the illegal earnings of Rs 143.79 along with 12 percent annual interest. At the same time, interest will be calculated from October 21, 2020 till the date of payment. Earlier in June 2023, SEBI had issued an interim order and action was taken against Hanif Shaikh and 225 other entities and they were banned.