Description

SEBI order against 27 entities for employing deceptive trading strategies and contributing to artificial price and volume manipulation in DU Digital scrip during August 26, 2021 to March 31, 2023.

Summary

SEBI has issued an order under Sections 11(1), 11(4), 11(4A), 11B(1) and 11B(2) of the SEBI Act, 1992 against 27 entities (Noticees) for engaging in fraudulent and unfair trade practices in the scrip of DU Digital Technologies Limited (now DU Digital Global Limited). The investigation revealed that these connected entities acted as a ‘group’ and employed deceptive trading strategies during the period August 26, 2021 to March 31, 2023, contributing to artificial increase in price and volume of the scrip listed on NSE’s SME platform.

Key Points

  • DU Digital’s share price increased by 1392.5% from listing price of Rs.12/share on August 26, 2021 to Rs.179.10 by March 31, 2023
  • The scrip reached a peak price of Rs.296.05 on November 11, 2022, representing 2467% increase from listing price
  • 27 entities (individuals and one corporate entity - Sun Flower Broking Private Limited) have been named as Noticees
  • Entities were found connected through common mobile numbers, common Mac-IDs, common IP addresses, and frequent fund flows
  • Investigation period divided into 4 patches based on trading patterns
  • Violations of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulation, 2003 identified
  • Order issued under multiple sections of SEBI Act, 1992 for holding inquiry and imposing penalties

Regulatory Changes

This is an enforcement order and does not introduce new regulatory changes. It applies existing SEBI (PFUTP) Regulations, 2003 and SEBI Act, 1992 provisions.

Compliance Requirements

  • The 27 named entities are subject to inquiry and potential penalties under SEBI regulations
  • Market participants should avoid coordinated trading activities that create artificial price movements
  • Entities must ensure compliance with PFUTP Regulations to prevent market manipulation
  • Trading members and brokers should maintain vigilance against connected entity trading patterns

Important Dates

  • Investigation Period: August 26, 2021 to March 31, 2023
  • Listing Date: August 26, 2021 (at Rs.12/share)
  • Peak Price Date: November 11, 2022 (Rs.296.05/share)
  • Order Reference: QJA/MN/IVD/ID7/31947/2025-26
  • Order Date: January 1, 2026

Impact Assessment

Market Impact: High - This order addresses serious market manipulation in an SME-listed scrip where coordinated entities artificially inflated prices by over 2400%, severely impacting market integrity and investor confidence in the SME platform.

Investor Impact: High - Retail investors who purchased shares during the manipulated price rise likely suffered significant losses when artificial price support was removed.

Regulatory Impact: High - Demonstrates SEBI’s continued focus on detecting and penalizing connected entity trading networks that manipulate SME scrips, setting precedent for similar enforcement actions.

Operational Impact: The named entities face potential trading restrictions, monetary penalties, and other sanctions that will affect their ability to participate in securities markets. The corporate entity Sun Flower Broking Private Limited may face additional scrutiny as a registered intermediary.

Impact Justification

Major enforcement action by SEBI against 27 connected entities for market manipulation involving artificial price rise of 2467% from listing price, indicating serious regulatory violation with systemic market integrity concerns.