Market regulator Securities and Exchange Board of India (SEBI) has imposed a penalty of Rs3.05 crore and banned 11 entities from participating in the market for a period ranging from one to five years for their involvement in a fraudulent scheme involving the scrip of Pressure Sensitive Systems (India) Ltd (PSSIL).
SEBI's investigation uncovered price manipulation, share offloading and the spread of misleading content through YouTube videos which artificially inflated the price and trading volume of PSSIL shares. The penalty also includes directions for noticees 2 to 11 to disgorge unlawful gains amounting to Rs2.54 crore.
The entities involved were: Vivek Chauhan (noticee 1), Manish Mishra (noticee 2), Anshu Mishra (noticee 3), Purav Bharatbhai Patel (noticee 4), Sejal P Patel (noticee 5), Hansaben Bharatkumar Patel (noticee 6), Saurabh Madhusudan Patel (noticee 7), Saurabh M Patel Hindu undivided family (HUF) (noticee 8), Umesh Balkrishan Tibrewala HUF (noticee 9), Anand Sureshbhai Lavingia (noticee 10) and Vivek Chauhan (noticee 11).
In the order, G Ramar, SEBI's chief general manager (CGM), stated, "The noticees engaged in a coordinated fraudulent scheme to induce investors to acquire PSSIL securities. Misleading message disseminators (MMD) uploaded false videos on YouTube, generating artificial interest in PSSIL's stock. Volume creators (VCs) bought shares prior to the videos being uploaded and sold a substantial portion at inflated prices, which was a direct result of the misleading content."
PSSIL, established in 1987 and specialising in coated products, was relisted in 2022 after being suspended for five years. During this period, several top shareholders, including members of the 'Mishra group' and 'Patel group', allegedly, colluded to manipulate the stock price for their benefit. The accused created false YouTube videos promising huge profits from PSSIL shares, backed by paid marketing campaigns.
According to SEBI, between 15th September and 16 September 2022, videos uploaded on two YouTube channels, ‘The Advisor' and 'Moneywise' spread false claims about the company, including exaggerated price increases and even a coal mine allotment in Australia. These videos attracted millions of views and misled new investors into purchasing shares at inflated prices. SEBI also found that these videos were promoted using Google AdSense to increase their reach.
The accused, referred to as VCs and MMDs, were involved in a ‘pump-and-dump’ scheme. “The Patel and Mishra groups, along with others such as Umesh Balkrishan Tibrewala HUF, Mr Lavingia, and Mr Chauhan, purchased large amounts of PSSIL shares before the videos were released and sold them once the price surged, capitalising on the artificially generated investor interest.”
The price of PSSIL shares rose sharply from Rs124.95 on 15 September 2022 to Rs202.55 by 29 September 2022, reflecting the influence of the misleading videos.
SEBI's investigation also examined the trading patterns of the involved entities, noting that several had frequent communications and timed their trades to coincide with the video releases. Despite the defence arguments, SEBI found that the combination of deceptive videos and coordinated trading created an artificial market and unjustly benefited the perpetrators.
Manish Mishra was fined Rs1 crore, while Vivek Chauhan, Anshu Mishra and Purav Patel were each fined Rs50 lakh. Sejal Patel and Hansaben Patel were each fined Rs15 lakh. Additionally, Saurabh Madhusudan Patel, Saurabh M Patel (HUF), Umesh Balkrishan Tibrewala (HUF), Anand Lavingia, and Vivek Chauhan were each fined Rs 5 lakh.
Further, Manish Mishra, Anshu Mishra and Purav Bharatbhai Patel have been banned for five years. Sejal P Patel and Hansaben Patel have been banned for four years. Vivek Chauhan has been banned for three years. Saurabh Patel, Saurabh M Patel (HUF), Umesh Balkrishan Tibrewala (HUF), Anand Lavingia, and Vivek Chauhan have been banned for one year.
