Telegram’s Illegal Stock Tips: Sebi Bans Two Entities, Here’s What You Should Know

Two companies, Hanif Kasambhai Shekh and Robert Resources Ltd., were banned by the markets regulator Sebi on Tuesday for a year for engaging in manipulative trading operations using a Telegram channel that was used to propose certain stocks to users.

Additionally, the regulator ordered Shekh and Robert Resources Ltd. (RRL) to disgorge the combined illegal profits of Rs 28.80 lakh, plus 12 percent interest annually, starting on February 18, 2022, and continuing until the final fraudulent trading date.

The directive was issued after a Sebi investigation into a possible stock pump and dump via the “Safebulls” Telegram channel, which was prompted by a September 30, 2021, complaint.

According to the lawsuit, the administrators of the aforementioned channel were engaging in fraudulent activity by flooding retail investors with garbage stocks.

The investigation’s time frame was January 2021–March 2022, with the goal of determining if “Safebulls” was involved in any actions that went against PFUTP regulations.

“I note that Noticee 1 (Hanif Kasambhai Shekh) engaged in the dissemination of manipulative messages recommending buying specific stocks on the Telegram channel and the trading account of Noticee 2 (RRL) was used to book profits from the resulting impact on the price and volume of the recommended scrip,” stated Anitha Anoop, Chief General Manager of Sebi, in her 26-page order.

Furthermore, whether trade is done on Noticee 1’s or Noticee 2’s account, Robert Resources is the same corporation where Shekh served as MD and authorized signatory to RRL throughout the investigation period.

Therefore, it has been determined that both notices are involved in this scheme, which violates the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) regulations.

Through these actions, the noticeees obtained an erroneous gain of Rs 28.80 lakh.

Anoop said, “I see that the Noticees 1 (Shekh) and 2 (RRL) have engaged in fraudulent activity and have breached the PFUTP rules, which prohibit manipulative, misleading, or fraudulent schemes/practices while dealing in securities.

Sebi therefore fined Shekh and Robert Resources Ltd. Rs 5 lakh each. Penalties must be paid both jointly and severally.

Social media stock recommendations might be dangerous for a few reasons:

Unqualified Advice: Anyone may share anything on social media, and there’s no assurance that the giver is a licensed financial counselor or acting in your best interests. They could even be attempting to manipulate the market to their advantage or basing their recommendations on hype.

Short-Term Focus: Stock recommendations often mirror the need for rapid satisfaction that permeates social media. They may persuade you to purchase a hot stock at the moment, but they’re not likely to assist you in developing a long-term investing plan.

Misinformation and Pump-and-Dump Schemes: Social media stock recommendations may include information that is blatantly false or even a component of a pump-and-dump scam. In one instance, someone inflates the price of a stock by promoting it, then they sell their shares before the price plummets, leaving everyone else with the bag.

The following are a few safer approaches to investing:

Make an investigation: Don’t let social media dictate your choices. Before making an investment, learn about the firms you are interested in and their financial situation.

Think about your risk tolerance: What level of risk can you tolerate? This will assist you in selecting the appropriate investment types.

Speak with a financial advisor: They can assist you in developing a customized investing strategy that satisfies your objectives.