Kiran Ka Kamal, Hitman Himanshu, Simi Ke Shares..on Zee Business: Exercise caution before taking investment advice on social media, says SEBI

The Securities and Exchange Board of India (SEBI) recently pulled up guest experts who gave investing advice on Zee Business and allegedly made unlawful gains to the tune of ₹7.41 crore..An interim order passed by Whole Time Member (WTM) Kamlesh C Varshney stated,"It is necessary for investors to exercise due diligence while listening to such experts on TV or on social media...Often many investors become victim of such schemes and have lost money. Hence, investors should exercise due diligence. If any expert promises that this particular scrip/contract will definitely rise and guarantees an assured return in short time, an immediate question should come to the mind as to why the expert is not using that information quietly to make profits for himself? It should be seen by investors whether that expert is registered with SEBI as research analyst? If no, whether he is violating the law and misguiding investors? If yes, whether his advice on a particular scrip/contract is backed by research and analysis or is it just part of a fraudulent scheme?".It also stated that there are many experts who are spreading financial literacy in India and empowering investors to make their own decisions."However, the same cannot be said about a few other experts who take advantage of their mass following to make unfair profits by misguiding innocent investors.".the same cannot be said about a few other experts who take advantage of their mass following to make unfair profits by misguiding innocent investors..The noticees in the present case were divided into three categories: profit makers, enablers and guest experts. Profit makers allegedly profited from trades executed based on advance information of stock recommendations. Enablers aided profit makers by providing support and credentials for executing trades. Guest experts provided stock recommendations on Zee Business and allegedly shared non-public information with profit makers before broadcasting their recommendations..They devised a scheme where guest experts, before making recommendations on Zee Business, communicated such information to each other and also with profit makers in advance. These profit makers executed the first leg of the trade just before the recommendation was aired. After the recommendation was aired, they closed their position with the second leg of transaction and earned profit to the tune of ₹7.41 crore between February and December 2022..During its investigation, SEBI found evidence of connections among the noticees, how the guest experts shared advance information with the profit makers, and how these profit makers took advanced positions in trades based on such non-public information.Based on its findings, SEBI found various noticees prima facie guilty of violating provisions of the SEBI Act and the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations.It came to the prima facie conclusion that a sum of ₹7,41,29,648 was required to be impounded jointly and severally from the noticees.The noticees were asked to show cause as to why further action should not be taken against them under the Regulations..On its part, Zee Business has gone on record to say that the guest experts who appeared on its channel were external and independent guests with whom the company had no relation beyond their TV appearances on Zee Business..[Read order]