SEBI Cracks Down on Unison Metals Stock Manipulation Scheme
The Securities and Exchange Board of India (SEBI) has taken decisive action against a sophisticated stock manipulation scheme involving Unison Metals Ltd (UML). In a comprehensive 98-page order issued on Thursday, the market regulator has imposed strict penalties and bans on multiple individuals involved in artificially inflating the company's share price through coordinated manipulation.
Three-Year Market Ban and Substantial Financial Penalties
SEBI has barred 15 individuals from accessing securities markets for three years while simultaneously imposing a total monetary penalty of Rs 3.6 crore. The regulatory action comes after thorough investigation revealed systematic manipulation of Unison Metals shares through misleading stock recommendations circulated on Telegram channels.
In addition to the market ban and penalties, the regulator has directed 10 individuals to disgorge unlawful gains exceeding Rs 3.87 crore. These funds must be credited to SEBI's Investor Protection and Education Fund within 45 days, ensuring that ill-gotten profits are returned to benefit the investor community.
The Manipulation Network and Key Players
SEBI's investigation uncovered a well-organized network where Yayaati Hasmukhray Nada played a pivotal role in the manipulative scheme. According to the order, Yayaati was taking investment decisions on behalf of Nirali Nada, Nahush Ashvinbhai Shukla, Prajesh A Shukla, and Reetaben Ashvinkumar Shukla while also advising Jignesh Pravinbhai Pethani on his trades.
The regulatory body identified several closely connected individuals including Jasavantbhai Patel and Hardik J Patel who were integral to the operation. SEBI's whole time member Amarjeet Singh noted in the order that the scheme could not have succeeded without the crucial involvement of Jalaj Agrawal and Arvind Shukla, who played essential roles in disseminating the misleading recommendations about UML shares.
Modus Operandi and Serial Offenders
The manipulation followed a classic 'pump and dump' pattern where Jalaj Agrawal was instrumental in directing the price at which recommendations should be posted by Arvind Shukla. Shailesh S Patel served as the critical link between the enablers and the primary disseminators, even selling shares of UML held by his son Malay Patel as part of the scheme.
SEBI's investigation revealed that Jalaj and Arvind are serial offenders who had previously carried out similar operations using social media platforms to disseminate misleading stock recommendations. The regulator noted they employed comparable tactics to artificially inflate share prices before dumping their holdings for unlawful profits.
Broader Network and Unlawful Profits
The scheme extended beyond the primary operators to include UML's promoters Tirth Mehta and Uttamchand Chandanmal Mehta, along with Sharad Ramkrishana Gattani. These individuals bridged connections between net sellers, profit makers, beneficiaries and operators while providing vital information in the form of Benpos and shareholding data.
According to SEBI findings, the net sellers, profit makers and beneficiaries took unfair advantage of artificially created price and volume spikes, executing their orders at inflated prices to earn unlawful profits worth over Rs 3.87 crore. The case originated from complaints received by SEBI in December 2021 about suspicious stock tips urging investors to buy Unison Metals Ltd shares.
Regulatory Action and Individual Penalties
SEBI has imposed fines ranging from Rs 10 lakh to Rs 1 crore on the 15 individuals for flouting various regulatory norms. The comprehensive action demonstrates the regulator's commitment to maintaining market integrity and protecting investors from sophisticated manipulation schemes that exploit social media platforms and communication channels.
This case serves as a significant warning to market participants about the serious consequences of engaging in coordinated stock manipulation, particularly through modern communication platforms like Telegram that can rapidly disseminate misleading information to large investor groups.
