Market regulator Securities and Exchange Board of India (SEBI), has come down hard on social media–driven stock manipulation, passing a final order against fraudulent stock recommendations in Unison Metals Ltd (UML).
The order concludes an extensive probe into a well-orchestrated scheme involving 17 traders, Telegram channel operators and company insiders who misled investors and cornered unlawful gains of ₹4.29 crore. SEBI has also imposed penalties totalling ₹3.65 crore and barred all 17 entities, including two promoters, from the securities market for periods ranging from one to three years.
The entities involved include: Tirth Uttamchand Mehta (promoter-director of UML), Uttamchand Chandanmal Mehta (promoter), Yayaati Hasmukhray Nada, Nirali Yayaati Nada, Jasavantbhai Patel, Jignesh Pravinbhai Pethani, Nahush Ashvinbhai Shukla, Prajesh A Shukla, Malay Shaileshbhai Patel, Reetaben Ashvinkumar Shukla, Hardik J Patel, Shailesh S Patel, Jalaj Agrawal, Arvind Shukla and Sharad Ramkrishana Gattan.
The case arose from complaints received by SEBI over repeated buy recommendations for UML shares circulated on popular Telegram channels during December 2021. These recommendations, often deleted the same day, were disseminated through channels with subscriber bases running into several lakhs. SEBI found that the tips were not genuine market opinions but part of a pre-planned strategy to artificially inflate the stock’s price and trading volume.
SEBI’s investigation uncovered a carefully structured operation in which a group of major shareholders systematically offloaded their holdings while Telegram operators created artificial demand through coordinated stock tips. These activities were allegedly facilitated by intermediaries and individuals connected to the company, including promoters, directors and close relatives, who acted as conduits between the sellers and the Telegram operators.
During the investigation period, trading activity in UML shares surged abnormally. Average daily volumes in December 2021 were nearly seven times higher than in the previous month, while the share price jumped more than 84% on an open-to-high basis. SEBI observed that this sharp spike was not supported by any improvement in the company’s fundamentals or by any material corporate announcements.
As prices and volumes surged, the identified net sellers steadily reduced their holdings. SEBI found that these entities collectively slashed their shareholding from over 17% of the company’s equity to less than 2% within a single month. On days when Telegram recommendations were issued, the sellers offloaded large quantities of shares in a staggered and coordinated manner, ultimately accounting for over 44% of the total market volume during the period.
Based on trade data, call records, WhatsApp chats, seized electronic devices and sworn statements, SEBI concluded that the scheme was executed with prior knowledge of the stock tips to be published. The regulator found evidence that Telegram operators were directed on the timing, price range, quantity, targets and stop-loss levels of the recommendations, and that commissions were paid for promoting the stock, including through non-banking and cash-based channels.
SEBI determined that the net sellers earned unlawful profits of ₹4.29 crore by exploiting the artificially created demand. The regulator held that the entities' conduct amounted to fraud and market manipulation, in violation of the SEBI Act, 1992, and the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulations.
While several noticees disputed the findings and challenged SEBI’s reliance on statements and circumstantial evidence, the regulator noted that the overall pattern of trading behaviour, communications and timing of stock promotions clearly established a coordinated and deceptive scheme.
The final order underscores SEBI intensified focus on curbing the misuse of social media platforms for stock manipulation and serves as a cautionary reminder to investors to remain wary of unsolicited stock tips circulated on Telegram and similar platforms.
The noticees have been directed to pay monetary penalties as detailed in the table below.
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