The Securities and Exchange Board of India (SEBI) has cracked down on alleged price manipulation in the shares of DU Digital Global, a company listed on the SME platform. SEBI has prohibited 26 individuals from trading in the securities market for artificially inflating the stock price. The market regulator has instructed these individuals to repay illegal gains exceeding Rs 98.78 lakh.
In a comprehensive 142-page order, SEBI has mandated the return of illegal profits and imposed monetary fines totaling Rs 1.85 crore. This action by the regulator follows an investigation into a significant surge in the share price of DU Digital Global, which soared from around Rs 12 in August 2021 to a peak of Rs 296.05 in November 2022. SEBI highlighted that the sharp increase in the stock price was not substantiated by the company’s business performance or any positive corporate announcements.
The investigation revealed that a group of interconnected traders employed deceptive and coordinated trading tactics to fabricate demand and trading volumes in the stock. SEBI emphasized that such practices, including synchronized and circular trades, lack genuine economic purpose and are solely intended to mislead investors by manipulating prices. The regulator also noted that some of the individuals involved had previously faced regulatory action in similar cases, indicating a recurring pattern of market misconduct.
SEBI underscored the detrimental impact on ordinary investors when connected entities manipulate stock prices in this manner, resulting in losses. Stressing the importance of safeguarding investors and upholding trust in the SME segment, SEBI stated that stringent regulatory measures are essential to deter such behavior and uphold the integrity of the securities market. The trading ban imposed on the 26 individuals will be effective for periods ranging from one year to 30 months.
DU Digital Global, formerly known as DU Digital Technologies, was listed on the NSE’s SME platform in August 2021. SEBI highlighted that this case underscores the dangers of price manipulation in smaller and less liquid stocks, emphasizing the need for investor vigilance.
