How Zee Business Experts Used TV Shows to Pocket Crores

The Securities and Exchange Board of India (SEBI) has imposed a fine of Rs 7.41 crore on five entities associated with the Zee Business news channel and 10 other entities for engaging in fraudulent and unfair activities within the securities market.

Now, here's the scoop.

Zee Business is one of the leading news channels in India. The channel broadcasts multiple stock market shows like 'First Trade' and '10 ki kamai' where experts share stock recommendations on the show. Everyone's eager to grab stock tips from the 'experts' featured on these shows, hoping for some quick gains.

However, it appears that some of these stock experts had their own agenda when making appearances. According to SEBI, some of these experts raked in close to ₹7.4 crores by fraudulent activities.

So, what's actually happened, you ask?

In a word — front-running.

Front-running, also known as forward-trading or tailgating, is a term used to describe the unethical practice where a broker or investor engages in a trade with advance knowledge of a confidential deal that will impact the price of an asset.

Alright, imagine you have a friend who works as a broker. Now, this friend has a special power – they know about big stock market moves before they happen. Let's say they find out that a lot of people are about to buy a bunch of shares from a company called XYZ.

Now, instead of keeping this info to themselves or telling everyone about it, your friend does something sneaky. They decide to use this secret information for their own benefit. So, before all those other people get to buy their shares of XYZ, your friend quickly buys some for themselves. This way, when everyone else starts buying, the price of XYZ goes up, and your friend makes a profit by selling the shares they bought earlier.

This tricky move your friend pulled off is what we call "front running." It's like having an unfair advantage in a race because you know the route before everyone else. But in the stock market, this isn't fair play – it's against the rules because it's using secret info for personal gain. And that's not cool!

You see, Zee Business' popular shows involve stock recommendations, including the Buy Today Sell Tomorrow (BTST) kind. These shows invite expert stock market guests like Kiran Jadhav, Ashish Kelkar, Himanshu Gupta, Mudit Goyal, and Simi Bhaumik. Now, some of these individuals weren't just offering advice; they were involved in a scheme.

The mastermind behind it all was Nirmal Soni, who had a background in stock brokering. Perhaps his industry connections played a role. His cunning plan was simple: gather stock recommendations from these guest experts minutes before they go on air, then pass this info to his network in stockbroking entities.

So, if a guest expert suggested buying a certain stock, Nirmal's network would swiftly snatch up those shares before the recommendation hit the airwaves. The ensuing public interest would boost trading volumes and stock prices. As soon as that happened, Nirmal's associates would sell the stocks, pocketing a tidy profit.

SEBI has now ordered the impounding of the unlawful gains, totaling ₹7.41 crore, earned from these deceitful activities. The culprits include Nirmal Kumar Soni, Partha Sarathi Dhar, SAAR Commodities, Manan Sharecom Pvt Ltd, Kanhya Trading Company, Kiran Jadhav, Ashish Kelkar, Himanshu Gupta, Mudit Goyal, and Simi Bhaumik.

SEBI points out that these entities devised a scheme where guest experts shared information in advance and made a profit of ₹7.41 crore during the investigation period. The market regulator has conducted a detailed investigation and search and seizure operations, emphasizing the urgency to protect investors from such fraudulent activities.

Mr. Varshney, the SEBI WTM, observed evidence of market abuse and a weakening of market integrity, stating, "The information is first shared with a select few with an intention to make unlawful gains before being shared in an open manner. Such practices shake investors' confidence in the stock market and interfere in the operation of ordinary market forces of supply and demand, thereby challenging market integrity."

He emphasizes the need for investors to exercise due diligence while listening to experts on TV or social media. He said, "It is necessary for investors to exercise due diligence while listening to such experts on TV or on social media. There are many orders passed by the SEBI which has highlighted how these platforms are used by some of these experts to implement fraudulent and unfair schemes like front running, pump and dump.

Often, many investors become victims of such schemes and have lost money. Hence, investors should exercise due diligence. If any expert promises that this particular scrip or contract will definitely rise and guarantees an assured return in a short time, an immediate question should come to the mind as to why the expert is not using that information quietly to make profits for himself?"