Sebi to re-investigate alleged manipulative trades involving former TV anchor

Markets regulator Sebi on Friday disposed of a show cause notice issued to a former TV anchor and his family in February for alleged manipulative trades and decided to re–investigate the matter.

''Sebi shall endeavour to complete the investigation within six months... and thereafter, to conclude the matter expeditiously,'' the order passed by Whole Time Member S K Mohanty said.

The Securities and Exchange Board of India (Sebi) observed a high correlation between the recommendations made by Hemant Ghai (noticee no 1) in the show 'Stock 20-20' that was being co-hosted by him on CNBC Awaaz, during the period January 2019 to May 2020, and the trades of his wife Jaya Hemant Ghai (noticee no 2) and his mother Shyam Mohini Ghai (noticee no 3) executed during the period.

Pursuant to a preliminary examination of the activities of the noticees, an interim order was passed in October 2020 in the matter wherein it was prima facie observed that the noticees were indulging in front running activities in the stocks that were being recommended by Hemant Ghai in the show during that period.

Collectively, Ghais are referred to as noticees.

Consequently, certain directions were issued against the three persons, including restraining them from securities market till further directions.

Later, a confirmatory order was passed in September 2021 in the matter, wherein the directions of the interim order were confirmed against the noticees. Sebi also noted that in compliance with direction issued under the interim order, Rs 2.95 crore have been deposited in an escrow account by them.

''Since all things having been considered, including the pattern of the impugned trades executed from the trading accounts of noticees no. 2 and 3 and the role of the TV shows hosted by noticee no. 1, based on which a re-investigation has been ordered in the matter, I find no reason to disturb the extant position at this stage,'' Mohanty said.

He disposed of the show cause notice dated February 24, 2022 that was issued to the noticees and directed Sebi to re–investigate the matter.

The interim order was passed pending investigation. Sebi proceeded with a detailed probe in the present matter to ascertain as to whether the trading activities of Jaya Hemant Ghai and Shyam Mohini Ghai were synchronised with the recommendation given by Hemant Ghai on the various shows hosted or co-hosted by him on CNBC. The investigation period was considered as from January 1, 2018 to January 13, 2021.

On the conclusion of the investigation, Sebi passed an an interim impounding order in the matter on February 3, 2022 directing the noticees to jointly and severally deposit an additional amount of Rs 3.9 crore, the same being the alleged additional unlawful gains arising out of their trading activities.

Following the completion of the investigation, a common show cause notice was served to the noticees dated February 24, 2022. It contained various facts unearthed during the investigation pertaining to the trading activities of the noticees and the consequent allegations that flowed from such facts about the noticees' trading activities.

In the show cause notice, it was alleged that Hemant Ghai, with participation of Jaya Hemant Ghai and Shyam Mohini Ghai had devised and executed a fraudulent scheme or device or artifice to trade in certain securities in synchronisation with the recommendations made in the shows hosted by him on CNBC Awaaz.

Thereafter, they allegedly unfairly took advantage of the impact of the recommendations by trading in synchronisation with the recommendations in the trading accounts of his wife and mother.