SEBI’s tough stand:
The Securities and Exchange Board of India (SEBI) on Tuesday imposed a fine of Rs 1 crore on former CNBC Awaaz Markets Editor Pradeep Pandya and technical analyst Alpesh Vasanji Furia. Along with them, six other entities have also been banned from the securities market for five years. These six other entities include Alpesh Furia (HUF), Alpa Furia, Manish Furia, Manish Furia (HUF), Mahan Investment, and Toshi Trade, who have been fined Rs 10 lakh.
Disclosure of Fraud:
SEBI found that Alpesh Group entities entered into fraudulent trades in sync with stock recommendations given by Pradeep Pandya or Alpesh Furia on CNBC Awaaz. These entities created positions in their favour even before the information became public.
“This conduct clearly shows that there was an intention to take advantage of insider information and reflects a systematic approach to exploit information asymmetry. This is a case of classical front running where a trader tries to take advantage of expected price changes from upcoming transactions in securities,” Sebi said.
Other actions:
Furia and related entities have been asked to refund Rs 2.4 crore with simple interest at the rate of 12% per annum, calculated for the period from the end of the investigation period to the date of the interim order. This is in addition to Rs 8.4 crore, which is part of the Rs 10.8 crore already deposited as illegal gains by the Alpesh Group entities.
SEBI Warning:
“When TV anchors share material non-public information, it not only violates ethical standards but also distorts market dynamics. Dissemination of such selective information gives an unfair advantage to a few, which undermines the principle of equal access to information. This erosion of trust can lead to significant loss of confidence among investors, who may feel that the markets are conspiring against them,” Sebi said.
What happened?
SEBI found that Alpesh Group entities and former CNBC Awaaz markets editor Pradeep Pandya and technical analyst Alpesh Furia had conspired to execute fraudulent trades. The plan was that when Pandya or Furia would make stock recommendations, Alpesh Group would take a position in advance and reap the benefits once the information was made public.
Why did it happen?
This fraud happened because Pandya and Furia misused their position to gain insider information and shared it with their associates. This type of fraud leads to loss of trust among other investors and puts a question mark on the transparency of the market.
How did it happen?
Alpesh Group entities used to make fraudulent trades by taking advantage of the stock recommendations given by Pradeep Pandya and Alpesh Furia on CNBC Awaaz. These entities would create their positions before the information became public and take advantage of the resulting price movement.
This case has made SEBI more vigilant and it has resolved to take strict measures to deal with such fraudulent cases in the future.
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