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SEBI bans CNBC Awaaz show host Hemant Ghai : Front Running using News Media

The stock market regulator 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 an 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.

It 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, Sebi said.

Hemant Ghai was recommending buys on TV and selling that same day completing his BTST and earning quick profits. Devious and clear manipulation :frowning: I am posting this, so brand-new investors understand the possibilities involved whenever they receive so called ‘tips’.

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I just think making such Sebi orders visible here could help new retail investors understand and appreciate certain intricacies of the so called news/tips. I don’t think this is out of scope of ValuePickr.

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Quoting from this article

This isn’t something new that has happened. The business media has been dealing with this problem for a while now. When I first started working for a newspaper in October 2005, it was very common for reporters to write a piece on a particular company and inform a stockbroker about it. They knew that their story would move the price of the stock the next day, after the story had appeared in the newspaper and people had read it. The broker would take a position in the stock because he had advance information.

The next day, after the story appeared and the stock moved, thanks to the news item, a profit was made and was shared between the broker and the reporter. Sometimes, the reporters were so blatant that they would call brokers directly from their office phone numbers.

In fact, many years back at the Press Club in Mumbai, a reporter, a few drinks down, even confessed to me that sometimes he front ran using his own trading account. His justification was that he made small bets that wouldn’t attract any attention. He went on to justify what he did by saying that if he had insider information because of his skill, he should be able to profit from it.

This particular gentleman worked for one of the bigger pink papers (and still did, the last I checked), and primarily reported on stocks and mutual funds. Given this, he was constantly in touch with fund managers and hence had access to sensitive information that moved stocks.

Personally, I really don’t mind people recommending stocks they own, unless its something very deceptive like what Hemant Ghai is being prima facie accused of.

Interesting article by Finshots covering the same

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