In an interesting finding, the market regulator Securities Exchange Board of India (SEBI) took a firm action against a group of six individuals posing to be markets research analysts, and recommend stocks to investors in bulk through a Telegram channel ‘bullrun2017’.
The six individuals running this channel bought shares of selected stocks and then recommended them to investors on the aforementioned Telegram channel, and through illegal practices made a profit of Rs 2.84 crore in 10 months.
BullRun2017 Scam on Telegram
According to a 37-page order issued by SEBI on the operators of the Telegram channel, the ‘BullRun2017’, the six individuals induced investors to trade in select scrips, which hiked the prices of those stocks and later they sold their shares in these stocks, making huge profits.
SEBI found these individuals trading in stocks including Total Transport Systems, MetroGlobal Ltd, and Alkali Metals Ltd, without any technical reason to do so and recommended investors in the Telegram channel to invest in these stocks, while posing as research analysts.
By influencing the investors to invest in these select stocks, they managed to raise an artificial demand in the market, directly impacting the price and volume of such scrips. SEBI’s order also showed that the said Telegram channel was also promoted on other social media platforms, including Instagram and Facebook.
The group’s subscriber base was 35,016 in July last year, which increased to 51,980 investors by Dec 14, 2021.
SEBI noted, “The texts of the messages being circulated… the recommendations about the specific scrips were being made in a very ingenious manner so as to create a “Fear Of Missing Out” amongst the subscribers,” cites a Bloomberg report.
SEBI’s Order on the Case
On getting information about the happenings of such an event, the markets regulator SEBI conducted a search operation on the operators of the group in Gujarat, and found that these individuals had no authorized registration from SEBI.
The administrators of the group claimed to be a team of four experienced research analysts, when in reality they were 6 people, of which only 1 individual made baseless recommendations on the stock picks and did not even possess any qualification related to the securities market.
Instead, he had a master’s degree in tourism management.
Based on these findings, the regulator has passed an ex-parte interim order barring the six individuals from the securities market, directing them to close any open positions within three months and pay up Rs 2.84 crore acquired via unlawful trades, added the report.
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