SEBI Penalizes And Bars Five Entities From Markets For Three Years

SEBI on Thursday slapped penalties totalling Rs 50 lakh on five entities as well as restrained them from the securities markets for three years for flouting regulatory norms in the matter of Bhatia Communications and Retail (India) Ltd.

The regulator also directed the entities to disgorge the wrongful gain of Rs 7.49 crore made by them, along with 12% interest per annum jointly and severally from July 2022 till the date of payment.

The Securities and Exchange Board of India imposed a fine of Rs 10 lakh each on NNM Securities, Miker Financial Consultants, Vibhuti Commodities, Festino Vincom, and Nikunj Anilkumar Mittal.

NNM Securities is a SEBI-registered market maker and stock broker, while Bhatia Communications was an SME scrip that migrated to the main board platform in September 2020.

"I find that the Noticees while executing trades in the scrip of Bhatia Communications during the investigation period has abused the stock market platform by creating false and misleading appearance of trading."

"It is established that during the pre-split investigation period NNM Securities (in its proprietary account) and the other the noticees viz Miker Financial, Vibhuti Commodities, Festino Vincom and Nikunj were indulged in price and volume manipulation in the scrip of Bhatia Communications during the IP and resultantly attracted gullible investors to buy the shares of the company," SEBI's G Ramar said in the order.

Thereafter the shares were offloaded at a higher price onto them during post-split investigation period making substantial profits, Ramar said.

If such activities are left unchecked, it will give wrong signals to the securities market, the order said.

"I am of also of the view that such fraudulent, manipulative and deceptive acts, device, plan and artifice employed by the noticees in this case have wider impact on the securities market and should be dealt with sternly," Ramar added.

By indulging in such activities, the entities have violated the Prohibition of Fraudulent and Unfair Trade Practices norms.

Further, SEBI said "with a view to increase the price and traded volume in the scrip are of serious and grave in nature and are inimical to the interests of participants in the securities market."

It clearly indicates that 'all noticees acted as a group and conspired and connive with one another in executing the whole scheme of manipulation'.

In July 2022, SEBI received a complaint, alleging that certain channels were uploading videos on Youtube to manipulate and offload shares of Bhatia Communications.

Further, the scrip of Bhatia Communications was examined for price and volume manipulation during the probe period, and it was alleged NNM Securities, Miker Financial Consultants, Vibhuti Commodities, and Festino Vincom acted together to pump up the price of the scrip.

After the stock split in February 2022, the entities dumped shares on gullible investors, made a wrongful profit of Rs 7.49 crore.

The order came after SEBI conducted an investigation in the matter of trading activities of certain entities in the scrip of Bhatia Communications & Retail (India) Ltd for the alleged price and volume manipulation during July 2021-2022.