Fraudulent trading: SEBI bars CNBC Awaaz anchor Hemant Ghai, family from trading

Market regulator Securities and Exchange Board of India (SEBI) on Wednesday restrained CNBC Awaaz anchor 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.

"If the aforesaid entities have any open positions in any exchange traded derivative contracts, as on the date of the order, they can close out/ square off such open positions within 3 months from the date of order or at the expiry of such contracts, whichever is earlier. The aforesaid entities are permitted to settle the pay-in and pay-out obligations in respect of transactions, if any, which have taken place before the close of trading on the date of this order," SEBI said in an interim order.

"Hemant Ghai shall cease and desist from undertaking, directly or indirectly, any activity related to giving investment advice, sell or buy recommendations, publishing of research reports etc., related to the securities market, till further directions," it added.

Besides, Hemant Ghai and his family have been directed to provide a full inventory of all assets held in their name, jointly or severally, whether movable or immovable, or any interest or investment or charge on any of such assets, including details of all bank accounts, demat accounts and mutual fund investments, immediately but not later than 5 working days from the date of receipt of this order.

They have been also been directed not to dispose of any assets, whether movable or immovable, or any interest or investment or charge on any of such assets, held in their name, jointly or separately, including money lying in bank accounts, except with the prior permission of SEBI until the impounded amount is deposited in the escrow.  

The depositories, registrar and transfer agents have also been directed to ensure that till further directions, no credits are made in the demat accounts of the entities, held jointly or solely.

SEBI said that the above directions shall take effect immediately and shall be in force until further orders. A copy of this order will be served upon all recognised stock exchanges, depositories, banks, registrar and share transfer agents to ensure compliance with the above directions.

"CNBC TV 18 is also advised to appropriately bring to the notice of the viewers of the shows 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.

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.

Hemant was prima facie using the trading accounts of his wife and mother. Besides, Jaya Hemant Ghai and Shyam Mohini Ghai are also liable for the violations, related to the trades done/facilitated in their accounts by him.

Hemant Ghai was hosting and co-hosting various shows such as 'Stock 20-20', 'Munafe Ki Taiyari Pehla Sauda' and 'Kamai Ka Add'. Stock 20-20 is described as a show that features recommendations on certain stocks to be bought and sold during the day.