It has also slapped a penalty of Rs 50 lakh each on Hemant Ghai and Jaya Ghai, Rs 30 lakh on MAS Consultancy Service, and Rs 5 lakh on financial services company Motilal Oswal Financial Services Ltd (MOFSL).
The regulator had concluded that Hemant Ghai used his position as a TV anchor to influence stock prices, while his family members executed trades in advance to profit from the recommendations.
“…Hemant Ghai had a huge following on social media and was closely followed on CNBC. The recommendations made by him influenced the investment decisions made by his viewers and impacted the price and volume of the recommended scrips.
“However, he unfairly used this privilege to his own advantage,” Sebi’s whole-time member Ashwani Bhatia said in the order.
In the final order, the regulator said, “A majority of trades and profits in the accounts of Jaya Ghai and Shyam Mohini Ghai stemmed from trades synchronised with stock recommendations made on CNBC by Hemant Ghai, husband and son, respectively, of the individuals in whose accounts the trades were executed”. Also, Sebi pointed out that Hemant has exercised operational control over these accounts, with his email, phone number, and bank credentials linked to them. “International Mobile Subscriber Identity Number (IMSI) and App ID data also confirmed access from his device to the bank account of Jaya Ghai linked to her trading accounts,” the regulator said in a 76-page order.
Further, call data records also showed that frequent communication with the MAS dealer executing these trades further corroborates the findings, it added.
Sebi also observed that there was an attempt to falsify records through fabricated order instruction sheets, along with the failure to provide copies of messages through which trades were allegedly placed, which further exposes the deliberate effort to conceal the nature of these transactions.
Further, the regulator said that MAS Consultancy Services (an authorised person affiliated with MOFSL) actively aided and abetted Hemant in executing fraudulent trades by permitting him to place trades in the accounts of his wife and mother without proper authorisation and by failing to maintain copies of trade instructions, as required under the rules.
By allowing trades placed by Hemant to be camouflaged as being placed by Jaya and Shyam Mohini, MAS provided a cover that enabled Ghai to exploit material non-public information for personal gains.
Such conduct of facilitating fraudulent trade practices by an intermediary falls foul of provisions of the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) rules.
The case revolved around trades executed between January 2019 and May 2020 in the accounts of Ghai’s wife, Jaya, and his mother, Shyam Mohini Ghai.
The investigation revealed that a substantial portion of their trades aligned with stocks recommended by Hemant on air.
Sebi noted that 81 per cent of their trades were linked to these recommendations, generating nearly 85 per cent of their profits. Thereafter, the regulator issued an interim order in January 2021, later confirming it in September of that year and impounding illegal gains in February 2022.
Further, a deeper probe expanded the investigation period to include intraday and BTST (Buy Today, Sell Tomorrow) trades. The revised findings also showed illegal gains amounting to Rs 6.16 crore made by the Ghai family, Sebi said.
