Sebi cracks down on bulk SMS scam, bars 135 entities from securities market

Impounds Rs 126 cr of wrongful gains; issues notices to over 200 entities

The Securities and Exchange Board of India (Sebi) has restrained 135 entities from accessing the securities market and directed them to impound around Rs 126 crore of wrongful gains from alleged market manipulation done through bulk SMSes.

The alleged manipulators first increased the price and volumes of five microcap companies through influencer entities and then circulated bulk messages with buy recommendations to public investors to lure them. Later, the players sold their previously acquired holdings in these companies at higher prices and booked profits.

Sebi noted that the ultimate beneficiaries included promoters of some of the companies and the prima-facie mastermind behind circulation of these messages Hanif Shekh.

 

The market watchdog has issued show cause notice to a total of 226 entities, including several mule accounts, for alleged market manipulation in five small cap companies namely, Vishal Fabrics, GBL Industries, Mauria Udyog, 7NR Retail, and Darjeeling Ropeway Company.

The possible disgorgement in the case could go up to nearly Rs 144 crore.

The markets regulator has cautioned investors to be aware of such fraudulent activities being carried out through SMSs, websites, and social media platforms like Telegram, Instagram, YouTube, etc. It further advised investors to only deal with Sebi registered intermediaries.

In its investigation into the manipulation, Sebi used digital footprints, cash deposit receipts and bank transactions to identify the SMS senders and other entities involved in such illegal activities.

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