India’s capital markets regulator, the Securities and Exchange Board of India (SEBI), has taken action against 221 entities involved in a stock manipulation scheme. The scheme, described as “industrial-scale,” targeted five listed companies and led to illegal gains of nearly Rs 144 crore. SEBI’s investigation identified Hanif Shekh as the mastermind behind the operation, which took place between 2017 and 2020.
The manipulation involved artificially inflating share prices and trading volumes of companies like Mauria Udyog, 7NR Retail, Darjeeling Ropeway Company, GBL Industries, and Vishal Fabrics. The network of over 200 entities executed the scheme by carrying out synchronized trades to create artificial demand, manipulating prices and trading activity. Large-scale SMS campaigns were then launched to encourage retail investors to buy shares at inflated prices.
Entities involved in the scheme sold their holdings at elevated prices, generating significant profits. The proceeds were funneled through multiple conduit companies, making it challenging to trace the ultimate beneficiaries. SEBI estimated the unlawful gains at Rs 143.79 crore and directed the entities to disgorge the amount with interest. Hanif Shekh has been barred from the securities market for seven years and fined Rs 10 crore, while others face penalties and market access restrictions.
SEBI’s investigation relied on various evidence sources, including trading records, bank transactions, mobile data, and WhatsApp conversations. The regulator’s enforcement actions aim to curb market abuse and hold those involved in the manipulation scheme accountable.
