In another case of stock manipulation, where videos on YouTube were used to spread false and misleading information to recommend a scrip, market regulator Securities and Exchange Board of India (SEBI) has impounded illegal gains worth Rs12.41 crore earned from manipulation Sharpline Broadcast Ltd scrip. SEBI found misleading message disseminators (MMDs) Manish Mishra and Manjari Tiwari spreading false news through his two YouTube channels, Midcapcalls and ProfitYatra. Incorrect information distributed by these two YouTube channels includes Adani group taking over Sharpline Broadcast and the company signing big contracts with Sony Pictures and Zee. In a separate investigation, SEBI found Mr Mishra using the same modus operandi to spread false information through YouTube channels and lure investors into investing in scrips, where linked entities would then divest their stocks at inflated prices.
In the case of Sharpline Broadcast scrip manipulation, SEBI also barred from markets all the 24 noticees till further orders.
In an interim order, Ananth Narayan G, whole-time member (WTM) of SEBI says, “I note that the elaborate
modus operandi adopted by the noticees, including the egregious misuse of patently false and misleading YouTube videos, had led to drastic increase in the number of small shareholders (i.e., from 517 to 20,009 shareholders) who ended up buying shares from the noticee net sellers at inflated prices. The financial impact that the fraudulent activity has had on small investors is undoubtedly a matter of grave concern. The pattern of false YouTube video uploads and artificial interest created in the scrip, lay bare the noticees’ utter disregard for the law. Persons who engage in such coordinated manner of fraudulent trading have the propensity to continue to wreak havoc on the securities market and dump shares at artificially inflated prices on unsuspecting small shareholders.”
“The repeated involvement of the noticees in similar activity raises serious concern that these entities are acting with impunity. The involvement of persons such as directors of the registrar and transfer agents (RTA) for Sadhna Broadcast Ltd and a dealer of a stockbroker is all the more disconcerting. Being associated with registered intermediaries, the said noticees are expected to maintain high standards of good conduct in the securities market. On the contrary, these noticees have misused their position to engage in a prima facie fraudulent conduct. The possibility that these noticees would be able to continue facilitating such schemes is an area of concern that needs to be immediately addressed,” the WTM says.
SEBI had launched an investigation after receiving the complaint that YouTube videos with false content, backed by paid marketing campaign worth crores of rupees for additional reach, were being uploaded to lure investors into the scrip of Sharpline Broadcast. Once these unsuspecting investors entered the scrip, the entities offloaded their holding at an inflated price.
After perusing call recordings, bank documents, relevant videos, and trade patterns, the market regulator found how the YouTube channels owned by Manish Mishra and Manjari Tiwari were used to manipulate the scrip price.
In the patch-wise analysis of the scrip, it was found that the price of the scrip increased by 150% from the closing price of Rs9.35 on 7 April 2022, to the closing price of Rs23.42 on 19 May 2022. The average volume in the second patch, from 20 May 2022 to 14 June 2022, increased from 53,261 to 9,13,590 shares. It was during this period that videos with false content were uploaded. Manish Mishra and Manjari Tiwari also bought and sold 27,770 shares and 9,295 shares, respectively.
The perusal of the bank transactions of Mr Mishra revealed that, during this period, he had spent Rs1.17 crore on Google Adsense to promote his videos.
SL Gupta, the highest volume creator in the first patch bought 1,62,960 shares and sold 1,00,000 in the second. Most of it was purchased by Jatin Manubhai Shah with whom Mr Mishra had connections through phone and bank transactions.
Jatin Manubhai Shah was connected to the top gross buyers and sellers Angad Ishwarlal Rathod, Gaurav Gupta, Heli Jatin Shah, Arpan Gupta, and Daivik Jatin Shah as he was the dealer who had executed trades for Mr Rathod and others. Heli and Daivik are his children.
Other entities who are connected and involved in the manipulation are: Mr Gupta, Anshu Agarwal, Kailash Agarwal, Renuka Aggarwal, Nitesh Agarwal, Gunjan Agarwal, Bhim Singh Chaudhary, Suman Lata, Bimla Choudhary, Subhash Agarwal, Anshul Agarwal, Vivek Rana, Hemant Dussad, and Rajesh Kumar Singh.
The interim order has directed all the accused to restrain from the security market until further order. Their bank accounts are frozen and SEBI has given them 21 days to submit their replies, objections and pleas for personal hearings.
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The higher level, more timepass!!