Substantial profits were generated by trading entities based on ...

Insider Trading Crackdown: Profit Makers Earned INR 7.41 Cr Through Advance Stock Tips.

Case Laws     SEBI

August 17, 2024

Substantial profits were generated by trading entities based on advance receipt of non-public information regarding stock recommendations from guest experts appearing on a business channel. Evidence shows correlation between trades executed by suspect entities and recommendations made by guest experts. Profit Makers collectively earned around INR 7.41 crore from 1047 instances of such trades, constituting 54% of their total profits during the relevant period. Guest experts admitted to having profit-sharing arrangements with Profit Makers for providing recommendations in advance. Trades were executed by Profit Makers in their accounts as well as accounts of other connected entities. The acts prima facie violate provisions of the SEBI Act prohibiting fraudulent and unfair trade practices by dealing in securities while possessing non-public information and devising schemes to defraud investors. A registered research analyst shared recommendations with her spouse before public dissemination, facilitating unfair trading, violating research analyst regulations. An interim ex-parte order is proposed to insulate markets, protect investors, prevent siphoning of unlawful gains, and issue show-cause notices for disgorgement, market debarment, and restraining registered analysts from advisory activities. Joint and several liabilities are proposed against relevant entities for the unlawful gains.

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