Sebi cracks down on Telegram front-running scam

The Securities and Exchange Board of India (Sebi) on Monday cracked down against entities allegedly involved in a front-running scandal using messaging app Telegram. The regulator conducted search and seizure operations against entities based in Ahmedabad and Mehsana in Gujarat, said sources.

Source said these entities operated Telegram channels which had subscribers running into thousands. The modus operandi were to build position in stocks ahead of recommending them on their channel. As most subscribers traded based on their tips, the shares used to see an upward movement. This helped them square off their positions for a profit.

During the searches, incriminating evidence in the form of electronic devices has been found and seized, said an official.

A detailed investigation is being carried out in the matter, the official added.

A lot of first-time investors rely on tips doled out on Telegram and WhatsApp groups for initiating trade, providing a fertile ground for unscrupulous individuals.

In 2017, Sebi had crackdown on circulation of tips and leak of price-sensitive information through WhatsApp.

The regulator time and again has cautioning individuals from circulation of messages unsolicited stock tips and investment advice.