Stock Manipulation: SEBI Asks 5 Entities To Disgorge Rs7.49 Crore, Pay Penalty of Rs10 Lakh Each

Moneylife Digital Team 31 May 2024

Investor Interest

While imposing a penalty of Rs50 lakh and directing disgorgement of Rs7.49 crore, the unlawful gains, the Securities and Exchange Board of India (SEBI) has barred five entities from markets for three years. SEBI also asked NNM Securities Pvt Ltd (noticee 1), a SEBI-registered stockbroker, Miker Financial Consultants Pvt Ltd (noticee 2), Vibhuti Commodities Pvt Ltd (noticee 3), Festino Vincom Ltd (noticee 4) and Nikunj Anilkumar Mittal (noticee 5) and director of NNM Securities, Miker Financial Consultants and Vibhuti Commodities, to pay unlawful gains of Rs7.49 crore earned by manipulating the share price of Bhatia Communications and Retail (India) Ltd. The Mittal family is interconnected with all these entities.

In an order, G Ramar, chief general manager (CGM) of SEBI, says that during the pre-split investigation period (IP) NNM Securities (in its proprietary account) and Miker Financial Consultants, Vibhuti Commodities, Festino Vincom and Nikunj Anilkumar Mittal were indulged in price and volume manipulation in the scrip of Bhatia Commination's during the IP and resultantly attracted gullible investors to buy the shares of the company, and thereafter offloaded shares at a higher price onto them during post-split investigation period making substantial profits. Hence the noticees have violated Sec. 12A (a), 12A (b), 12A (c) of SEBI Act of SEBI PFUTP Regulations.

SEBI received one complaint on July 2022, alleging that certain channels were uploading videos on YouTube to manipulate and offload shares of Bhatia Communications. Following this, SEBI examined the price and volume manipulation during the investigation period from July 2021 to 2022, confirming that the entities acted in concert to inflate the scrip's price artificially.

The fraudulent scheme involved manipulating the stock price and volume of Bhatia Communications before a stock split in February 2022. Post-split, these five entities dumped their shares on unsuspecting investors, reaping wrongful profits amounting to Rs7.49 crore. SEBI's investigation highlighted how coordinated trading activities among these entities created an artificial demand and price rise, luring investors into buying at inflated prices.

The issue revolves around Bhatia Communications, initially a SME scrip, which migrated to the main board platform in September 2020.

Mr Ramar further mentioned that the noticees, while executing trades in the scrip of Bhatia Communications, created a false and misleading appearance of trading, thereby attracting gullible investors.

He says, "The fraudulent, manipulative and deceptive device, plan and artifice employed by noticees in this case, not only endanger the interests of investors in securities but also the integrity of securities market as a whole. If such activities are left unchecked, it will give wrong signals to the securities market. I am of also of the view that such fraudulent, manipulative and deceptive acts, device, plan and artifice employed by the noticees in this case have wider impact on the securities market and should be dealt with sternly.”

NNM Securities, Miker Financial Consultants, Vibhuti Commodities, Festino Vincom, and Nikunj Anilkumar Mittal are instructed not to sell or transfer any of their assets, properties, or securities until they have complied with the directives of this order.

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