Description

SEBI order against 27 entities for fraudulent and unfair trade practices in DU Digital Technologies Limited scrip, involving connected entities acting as a group to artificially inflate price and volume during August 2021 to March 2023.

Summary

SEBI has issued a final order under Sections 11(1), 11(4), 11(4A), 11B(1) and 11B(2) of the SEBI Act, 1992 against 27 entities (individuals and one company) 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 26 connected entities (Noticee No. 1-26) acted as a group employing deceptive trading strategies that contributed to artificial increase in price and volume of the scrip during the investigation period from August 26, 2021 to March 31, 2023. The scrip price increased by 1392.5% during this period, closing at Rs.179.10 compared to listing price of Rs.12/share, and reached a peak of Rs.296.05 (2467% of listing price) on November 11, 2022.

Key Points

  • 27 entities charged with violations of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003
  • Scrip of DU Digital Technologies Limited listed on SME platform of NSE on August 26, 2021 at Rs.12/share
  • Price increased by 1392.5% to Rs.179.10 during investigation period (August 26, 2021 to March 31, 2023)
  • Highest price of Rs.296.05 recorded on November 11, 2022 (2467% increase from listing price)
  • 26 entities (Noticee No. 1-26) found to be connected through common mobile numbers, common MAC-IDs, common IP addresses, and frequent fund flows
  • Connected entities acted as a ‘group’ employing deceptive trading strategies
  • Artificial increase in both price and volume observed in the scrip
  • Investigation period divided into 4 patches based on trading patterns
  • Order issued under reference number QJA/MN/IVD/ID7/31947/2025-26

Entities Named in Order

Individual Noticees (1-26):

  1. Usha Devi (PAN: AEXPU5745D)
  2. Jagdish Chhanabhai Vaghela (PAN: AFPPV2562Q)
  3. Mahendrabhai Sanghvi (PAN: AHHPS5907J)
  4. Kuntal Jitendra Trivedi (PAN: AKNPT2945A)
  5. Jigneshkumar Purshottamdas Patel (PAN: AQEPP8019J)
  6. Girish Kantilal Parmar (PAN: AUDPP6127A)
  7. Pranav Kamleshkumar Trivedi (PAN: AWQPT8856R)
  8. Nikunj Sureshchandra Shah (PAN: AXVPS2543L)
  9. Sagarkumar Pravinchandra Dataniya (PAN: BJIPD7414F)
  10. Vidhi Nikunj Shah (PAN: BJIPS4239M)
  11. Nayan Mahendrabhai Thakkar (PAN: BYHPT2277A)
  12. Babubhai Somabhai Rathod (PAN: CABPR8597Q)
  13. Manjulaben Parmar (PAN: DKYPP5235B)
  14. Ankit Ajitbhai Panchal (PAN: ECSPP4637J)
  15. Bhaumik Parmar (PAN: EQQPP8919H)
  16. Manoj Rameshbhai Solanki (PAN: GEMPS6325N)
  17. Rathod Mahendrkumar (PAN: GXKPM4466F)
  18. Shvetalben Sagarbhai Dataniya (PAN: CQGPD5278K)
  19. Rohit Bairwa (PAN: ELYPB0179Q)
  20. Madhu Kumari Bairwa (PAN: GBAPB7834Q)
  21. Sanjay Savjibhai Parmar (PAN: CGSPP7609A)
  22. Dhaval Vinodbhai Gadani (PAN: BWGPG2510J)
  23. Dhaval Girishbhai Parmar (PAN: EPZPP2397F)
  24. Punjiben Babubhai Rathod (PAN: CABPR8593L)
  25. Vyas Jitendrakumar Hasmukhlal (HUF) (PAN: AAKHV6316C)
  26. Jitendra Hasmukhlal Vyas (PAN: AEZPV7923A)

Corporate Noticee (27): 27. Sun Flower Broking Private Limited (PAN: AAACN5165E)

Regulatory Framework

  • Securities and Exchange Board of India Act, 1992 - Sections 11(1), 11(4), 11(4A), 11B(1) and 11B(2)
  • Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995 - Rule 5
  • SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (PFUTP Regulations)

Investigation Methodology

  • Connections established through:
    • Common mobile numbers among entities
    • Common MAC-IDs used for trading
    • Common IP addresses
    • Frequent fund flows between the entities
  • Trading pattern analysis conducted
  • Investigation period divided into 4 patches for detailed examination

Impact Assessment

Market Impact:

  • Artificial price manipulation in SME segment undermines investor confidence
  • Distortion of genuine price discovery mechanism in the scrip
  • Potential losses to genuine investors who traded based on manipulated prices
  • Exponential and artificial volume creation misleading market participants

Regulatory Impact:

  • Demonstrates SEBI’s enhanced surveillance capabilities in SME segment
  • Sets precedent for action against coordinated manipulation by connected entities
  • Reinforces importance of market integrity in smaller cap segments
  • Highlights use of technology-based evidence (MAC-ID, IP addresses) in establishing connections

Investor Protection:

  • Action protects retail investors from sophisticated manipulation schemes
  • Deters similar coordinated activities by demonstrating detection and enforcement capabilities
  • Emphasizes risks in SME platform trading where liquidity and scrutiny may be lower

Impact Justification

Major enforcement action against 27 entities for coordinated market manipulation resulting in 1392.5% artificial price increase in SME listed scrip, demonstrating SEBI's commitment to preventing fraudulent trading practices and protecting market integrity.