The Securities and Exchange Board of India (Sebi) has taken decisive action against Pradeep Pandya, a former TV anchor, and seven other entities for their involvement in fraudulent trading activities.

The market regulator has barred them from accessing the securities market for five years and imposed a collective fine of Rs 2.6 crore.

The Accused

Pradeep Pandya, who hosted several stock market shows on CNBC Awaaz until August 2021, and Alpesh Furiya, who appeared on the channel as a guest expert, are at the center of this scandal. 

The other entities banned by Sebi include Manish Furiya, Alpa Furiya, Alpesh Vasanji Furiya HUF, Manish V Furiya HUF, Mahan Investment, and Toshee Trade.

Insider Trading Allegations

Sebi’s investigation revealed a high correlation between the stock recommendations made by Pandya on his show “Pandya Ka Funda” and the trades executed by Alpesh Furiya and associated entities. This pattern was observed during the period from November 2019 to January 2021.

“Pradeep Pandya, while serving as an anchor for CNBC Awaaz, shared confidential information regarding upcoming stock recommendations with Alpesh Furiya and vice-versa,” Sebi stated in its final 55-page order.

Utilizing this privileged information, Furiya executed trades through his accounts and those of related entities, allowing him to profit before the recommendations were made public.

Systematic Exploitation

Sebi’s findings suggest that Furiya passed on these insider tips to Opu Funikant Nag in exchange for a salary increase. This behavior demonstrates a clear intent to exploit insider information for personal gain, indicating a systematic approach to leveraging information asymmetry.

The National Stock Exchange (NSE) had earlier forwarded a report in December 2020, which analyzed the trading activities of Furiya and related entities. Sebi then conducted further analysis between November 2020 and January 2021, scrutinizing the call data records of Pandya and Furiya.

The investigation confirmed that Pandya had access to advance information about stock recommendations and communicated it to Furiya and others, who traded in a synchronized manner with Pandya’s recommendations on his show.

Violations and Penalties

The entities’ actions violated the provisions of the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) norms. Consequently, Sebi has restrained Pandya, Furiya, and other entities from accessing the securities market. 

They are prohibited from buying, selling, or dealing in securities, directly or indirectly, or being associated with the securities market in any manner for five years. Sebi has also imposed fines of Rs 1 crore each on Pandya and Furiya and Rs 10 lakh each on the other six entities.

Additionally, Sebi directed Furiya and his related accounts, as well as Opu Funikant Nag, to disgorge unlawful gains made from fraudulent trades. 

Furiya and his associated accounts made an illegal gain of Rs 10.73 crore, of which Sebi has already impounded Rs 8.4 crore. They now have to disgorge the remaining amount of Rs 2.34 crore. This stringent action by Sebi underscores its commitment to maintaining market integrity and cracking down on fraudulent activities. 

By penalizing those who engage in unethical practices, Sebi aims to protect investors and uphold the principles of fairness and transparency in the securities market. This case serves as a stark reminder of the consequences of insider trading and the importance of adhering to regulatory norms. 

As Sebi continues its efforts to monitor and regulate market activities, stakeholders are encouraged to remain vigilant and report any suspicious activities to ensure a fair and transparent market environment.

The information is taken from The Economic Times and Business Standard