SEBI Crackdown- Alert and WARNING on writing style


(Left this forum) #1

We have been accustomed to lethargic regulator, inaction for years, juvenile redress system and so on. But no one should forget the the abundant power enjoyed by the regulators.

The recent pronouncement of 25 lacs penalty on a market participant based on online indulgence (started with twitter comments !) should be an eye opener to all of us. Here is the link:

http://www.sebi.gov.in/enforcement/orders/nov-2017/adjudication-order-in-in-the-matter-of-shri-anirudh-sethi_36752.html

We all know amount of such similar activities distributed online is still rampant. But it has reminded we can be caught and slapped any time. If you look at the adjudication order following comes out clearly:

  1. Investment advice based on subscription fees collected from website and subsequently stock tips has been provided on future. Very dicey, the definition of tips is a black hole!
  2. It is observed that language used by the Noticee in his tweets weighs heavily towards creating
    panic / sensation among investors encouraging them to act fast lest they lose.
  3. SEBI had noticed that some entities were offering investment advices / tips on purchase and sales of securities through media.
  4. SEBI had also noted that the Noticee was also giving stock recommendations through certain websites giving reference to certain email IDs .
  5. I note that the aforesaid website has certain enticing statements such as “Our
    technical forecasts will give profit if market rise or fall. This has been proved umpteen
    times in the past 2 decades. That’s why we get innumerable request mails showing
    interest to join. I also note that the website has certain catchy captions like “whoever
    wins World-Cup, our subscribers will ever be winners”. Such captions have the power
    of attracting gullible investors. The details displayed in his website clearly indicate
    that the Noticee was offering subscription based investment advisory services to
    investors.
  6. On page no 16/17 examples of tweet has been given. Kindly go through them.
  7. I also find from the contents mentioned in the Noticee’s tweets that the Noticee had
    used the terms such as “In any panic Buy Buy Buy…Watch EXPLOSION”,
    Manipulation +Rigging over”,” some big selling on cards”, “See stock crashing to “
    ”Bloodbath upto” ” Fastest money fast”, “Buy In tons”, “See Stock Doubling”. In
    view of the above, it goes without saying that gullible investors would have been
    easily enticed by the contents mentioned in the Noticee’s tweets and could have
    made investment decisions based on tweets posted by the Noticee.

This is the most important for all of us

I note that the Noticee has argued that there was no embargo on giving any
recommendations containing company specific news. The embargo was only on
recommendations containing company specific news which amounts to violation. Now look at what SEBI says, On close reading of the two directions, it may transpire that SEBI had directed the Noticee to cease and desist from giving investment advice to clients including**(emphasis supplied) any recommendation which is in violation of SEBI (PFUTP)Regulations. Thus, I note that the Noticee has narrowed down the broad direction ofSEBI vide Order dated 2007 to come to the conclusion that recommendation should****be violative of SEBI (PFUTP) Regulations, 2003 inorder to attract any action.****Therefore, the narrow interpretation of directions of SEBI is not acceptable.

  1. “We are also of the view that if market players are allowed to flout with impunity the orders of the regulator it would be difficult for the latter to carry out its statutory duties”.

Not saying we are all doing here or some where else. But this sets a REMINDER, TONE OF LANGUAGE, PUNITIVE POSSIBILITIES AND MORAL CONSEQUENCES for all of us.

Let us hope SEBI continues to crack down, too many still left out. But a good beginning is always good. Celebration time!