The regulator carried out search and seizure operations at the premises of seven individuals and one entity at multiple Ahmedabad and Bhavnagar in Gujarat, Neemuch in Madhya Pradesh, New Delhi and Mumbai.
“These entities are reportedly operating nine Telegram channels with more than five million subscribers to whom they were making recommendations on selected listed scrips,” Sebi said in a late evening press release.
“Such recommendations induced the investors to deal in the said scrips, thereby creating artificial volume and price rise. This provided an opportunity to their linked entities to off-load their shares at higher prices and make significant profits at the cost of unsuspecting retail investors.”
Sebi officials seized various electronic devices and documents including 34 mobile phones, six laptops, four desktops, four tablets, two hard drive disks and one pen drive from them.
Before carrying out the search operations, the regulator took permission from Justice Purushottam B Jadhav of Sebi special court.
The data, emails and other documents are being retrieved from the seized devices and a detailed investigation is in progress, the regulator said.
Sebi had received information that messages containing stock tips and other investment advice with respect to selected listed companies were being widely circulated through websites and social media platforms such as Telegram, Facebook, WhatsApp and Instagram.
Perpetrators of such fraud use various marketing techniques to attract subscribers on their social media channels, Sebi said.
Last year in December, Sebi had conducted a search and seizure operation in Gujarat in the premises of certain individuals carrying out similar manipulative activities through Telegram channels. Subsequently, the regulator had passed an order against the administrators of the channel.
The regulator alleged that these administrators had built substantial positions in these stocks prior to the circulation of recommendations and offloaded their positions subsequent to rise in the price of these scrips making significant profits at the expense of unsuspecting investors.
In the past, Sebi had noticed that investors were induced to invest in stocks of listed companies through bulk text messages. It raised the issue with its counterpart in the telecom sector.