Ali Hasan
Market regulator Securities and Exchange Board of India (SEBI) on Wednesday restrained CNBC Awaaz host Hemant Ghai, his wife and mother from accessing securities market over charges of fraudulent trading. Ghai hosts the “Stock 20-20” show on the channel.
The regulator said that Ghai had the “advance information about the recommendation to be made on the show and that he directly/indirectly used it to his advantage”.
In order to protect the interests of the investors and the integrity of the securities market, SEBI has restrained Hemant Ghai and his wife Jaya Hemant Ghai and mother Shyam Mohini Ghai from buying, selling or dealing in securities, either directly or indirectly, in any manner whatsoever till further directions.
In addition, he has been directed to cease and desist from undertaking any activity related to giving investment advice, publishing of research reports related to the securities market, till further directions. The bank accounts of Hemant Ghai and his family have also been frozen for debit till further orders.
“CNBC TV 18 is also advised to appropriately bring to the notice of the viewers of the show co-hosted by Hemant Ghai that SEBI has passed an interim order against him for prima facie violations of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003,” the order noted.
SEBI, prima facie, found that Hemant along with his wife Jaya Hemant Ghai and mother Shyam Mohini Ghai employed a scheme to conduct fraudulent or unfair trading based on the advance information pertaining to recommendations to be made in the show stock-20-20.
On analysis of the trading pattern in the trading account of Jaya Hemant Ghai and Shyam Mohini Ghai for the period between January 1, 2019, and May 31, 2020, high correlation of their trades was observed with the stocks recommended in the show. It thereby generated the proceeds of Rs 2.95 crore by carrying out fraudulent trading in respect of recommended stocks.
Hemant Ghai made a profit of Rs 2.95 crore through total 82 trades between January and May 2019 (79 trades) and three trades were carried out in February 2020. Ghai’s family has pocketed a hefty sum of Rs 3.60 lakh per trade during the period. The regulator found that shares were consistently purchased in the trading accounts of Hemant Ghai’s wife and mother, one day prior to the day of recommendation on the show.
To capture the significant benefits from the price movement caused by the recommendations on the show, they then sold their shares as soon as the market opened on the day of the recommendation and consequently, earned profits and perpetrated a fraud upon the market and the viewers of the show, it added.
“This repeated pattern carried out on 90 occasions aggregating gross traded value of over Rs 100 crore rules out that it can be due to coincidence. The trading behaviour of the entities reflecting great confidence and incentive to trade in the pattern as discussed above shows that Hemant Ghai was having advance information of buy “recommendation”, the SEBI order said.
Ghai is the first media person to be banned by SEBI, who has been found guilty prima-facie in front running. Till now all the persons found guilty of such violations were either the operators or were associated with the capital market intermediaries.
It was reported that the Network18 group that runs CNBC Awaaz has terminated Ghai with immediate effect. The statement issued by the Ghai’s employer, CNBC TV 18 said, “All employees of Network18 are required to pledge themselves to a code of conduct which, among other things, expressly forbids the manipulation of prices of listed securities. Mr. Ghai was also a signatory to the code of conduct”.
Network18 takes its commitment to honesty and integrity seriously. “We will not tolerate any behaviour which does not conform to the highest standards of professional and ethical conduct. In keeping with our values, we have terminated Mr Ghai within hours of becoming aware of the SEBI order,” it said in a statement.
As this is the 1st case of front running by a show host, we can’t predict what will happen next. If you actually what to know, stay tuned on to startuptrak as we will follow this story and update it from time to time.
