Description

SEBI's final order against 17 entities for stock manipulation and fraudulent recommendation tips in Unison Metals Ltd scrip, involving profits of ₹4.29 crore through Telegram channels.

Summary

SEBI issued a final order under Section 11(1), 11(4), 11(4A), and 11B of the SEBI Act against 17 entities (noticees) in connection with fraudulent stock recommendation tips and market manipulation in the scrip of Unison Metals Ltd (UML). The order emanates from an Interim Ex Parte Order dated July 31, 2024. The entities are alleged to have executed a scheme involving coordinated buying and selling based on advance information about stock recommendations posted on Telegram channels, resulting in illegal profits of ₹4,29,80,725.70.

Key Points

  • 17 entities charged across three categories: Net Sellers/Profit Makers/Beneficiaries (10 entities), Operators (3 entities), and Enablers (4 entities)
  • Total illegal profit: ₹4,29,80,725.70 (approximately ₹4.29 crore)
  • Scheme involved: Advance receipt of information about pre-decided stock recommendations to be posted on Telegram channels operated by the operators
  • Net Sellers/Profit Makers (Noticee Nos. 1-10): Yayaati Hasmukhray Nada, Nirali Yayaati Nada, Jasavantbhai Patel, Jignesh Pravinbhai Pethani, Mukti Lodha, Nahush Ashvinbhai Shukla, Prajesh A Shukla, Malay Shaileshbhai Patel, Reetaben Ashvinkumar Shukla, Hardik J Patel
  • Operators (Noticee Nos. 11-13): Shailesh S Patel, Jalaj Agrawal (connector), Arvind Shukla (Telegram channel operator)
  • Enablers (Noticee Nos. 14-17): Tirth Uttamchand Mehta and Uttamchand Chandanmal Mehta (directors cum promoters of UML), Manishaben Bipinchandra Panchal (director of UML), Sharad Ramkrishana Gattani (father-in-law of Noticee No. 14)
  • Profit shared with operators through non-banking channels

Regulatory Changes

This is an enforcement action rather than a regulatory change. It reinforces existing prohibitions against:

  • Fraudulent and unfair trade practices
  • Market manipulation through coordinated trading
  • Use of social media platforms (Telegram) for illegal stock recommendation schemes
  • Insider involvement of company directors and promoters in manipulation schemes

Compliance Requirements

  • Market participants must not engage in coordinated trading based on advance information about stock recommendations
  • Prohibition on operating or facilitating fraudulent stock tip services through any medium including social media platforms
  • Company directors and promoters must not aid or abet market manipulation schemes
  • Stock recommendation services must comply with SEBI regulations and registration requirements
  • All trading must be based on publicly available information without advance coordination

Important Dates

  • July 31, 2024: Interim Ex Parte Order cum Show Cause Notice issued
  • February 5, 2026: Final Order published (WTM/AS/ISD/ISD-SEC-6/32028/2025-26)

Impact Assessment

Market Impact: High - This enforcement action sends a strong deterrent message against organized stock manipulation schemes using social media platforms. The involvement of company insiders (directors and promoters) as enablers represents a serious breach of fiduciary duties.

Regulatory Impact: High - Demonstrates SEBI’s enhanced surveillance capabilities in detecting coordinated manipulation schemes across multiple channels including Telegram. The case establishes clear categorization of participants (beneficiaries, operators, enablers) in manipulation schemes.

Investor Protection: The order protects retail investors who may have acted on fraudulent Telegram recommendations without knowledge of the coordinated scheme. It highlights risks of following unregistered stock tip providers on social media.

Precedent Value: Sets important precedent for holding not just direct beneficiaries but also facilitators and company insiders accountable for their roles in manipulation schemes, regardless of whether they directly profited from trading.

Violations Alleged

Noticee Nos. 1-10 (Net Sellers/Profit Makers/Beneficiaries) prima facie violated:

  • Clauses (a), (b), (c), and (e) of Section 12A of SEBI Act
  • Clauses (a), (b), (c), and (d) of Regulation 3 of PFUTP Regulations
  • Sub-regulation (1) of Regulation 4 of PFUTP Regulations
  • Clause (d) [text appears truncated in source document]

Impact Justification

Major enforcement action involving ₹4.29 crore profit through fraudulent stock recommendation scheme, violations of SEBI Act provisions, and coordinated manipulation involving net sellers, operators, and company enablers