Description

SEBI passes final order against 17 entities involved in manipulating Unison Metals Ltd stock through telegram channel recommendations, with profits of ₹4.29 crores.

Summary

SEBI has issued a Final Order under Sections 11(1), 11(4), 11(4A), and 11B of the SEBI Act against 17 entities involved in a coordinated scheme to manipulate the price and volume of Unison Metals Ltd (UML) shares through stock recommendations posted on Telegram channels. The scheme resulted in illegal profits of ₹4,29,80,725.70. The entities are categorized into three groups: Net Sellers/Profit Makers (10 entities who profited from advance information), Operators (3 entities who facilitated telegram channel recommendations), and Enablers (4 entities including company directors/promoters who aided the scheme).

Key Points

  • 17 entities charged with orchestrating market manipulation in Unison Metals Ltd scrip
  • Total illegal profits calculated at ₹4,29,80,725.70 (approximately ₹4.29 crores)
  • Scheme involved advance receipt of information about stock recommendations before public posting on Telegram channels
  • 10 Net Sellers/Profit Makers executed trades based on advance information
  • 3 Operators facilitated the posting of stock recommendations on Telegram channels
  • 4 Enablers (including company directors and promoters) bridged the gap between profit makers and operators
  • Profit sharing occurred through non-banking channels
  • Interim Ex Parte Order cum Show Cause Notice was issued on July 31, 2024

Regulatory Changes

This order reinforces existing regulations against market manipulation and establishes enforcement precedent for:

  • Use of social media platforms (Telegram) for disseminating fraudulent stock tips
  • Coordination between company insiders (directors/promoters) and external operators
  • Profit-sharing arrangements through non-banking channels to facilitate manipulation
  • Application of Section 12A of SEBI Act and Regulation 3 and 4 of PFUTP Regulations to social media-based manipulation schemes

Compliance Requirements

  • Market participants must not engage in coordinated buying/selling based on advance information about stock recommendations
  • Prohibition on operating or facilitating stock recommendation channels that enable manipulative trading
  • Company directors and promoters must not aid or abet schemes to manipulate their company’s stock price/volume
  • All profit-sharing arrangements related to securities trading must comply with banking channel requirements
  • Entities must comply with clauses (a), (b), (c), and (e) of Section 12A of SEBI Act
  • Compliance required with clauses (a), (b), (c), and (d) of Regulation 3, and sub-regulation (1) of Regulation 4 of PFUTP Regulations

Important Dates

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

Impact Assessment

Market Impact: High - This enforcement action sends a strong signal against social media-based market manipulation schemes. The involvement of company directors and promoters as enablers demonstrates SEBI’s willingness to pursue insiders who facilitate such schemes.

Investor Protection: The order protects retail investors who may be lured by telegram channel stock tips without knowing the recommendations are part of coordinated manipulation schemes where operators profit from advance information.

Precedent Value: Establishes important precedent for prosecuting multi-party manipulation schemes involving: (1) social media platforms for tip dissemination, (2) advance information sharing, (3) company insider involvement, and (4) non-banking channel profit transfers.

Operational Impact: Market participants operating stock recommendation services on social media platforms face increased scrutiny. Companies must ensure directors/promoters do not participate in schemes to manipulate their stock.

Entity Categories:

  • 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, Arvind Shukla (telegram channel operator)
  • Enablers (Noticee Nos. 14-17): Tirth Uttamchand Mehta, Uttamchand Chandanmal Mehta (directors/promoters of UML), Manishaben Bipinchandra Panchal (director of UML), Sharad Ramkrishana Gattani (father-in-law of Noticee No. 14)

Impact Justification

Major enforcement action involving 17 entities, ₹4.29 crore illegal profits, and systematic market manipulation through social media channels. Sets precedent for telegram-based stock manipulation cases.