Sharpline stock manipulation: Sebi refuses to lift ban on 9 entities for misleading YouTube videos

New Delhi: Sebi has refused to lift the securities market ban imposed on nine entities in a case concerning manipulating the share prices of Sharpline Broadcast Ltd through uploading misleading videos on YouTube channels.

The regulator, through an interim order in March, barred 24 entities from the securities market based on prima facie findings, and now it has confirmed the ban against nine of them.

"The prima facie findings in the interim order dated March 2, 2023, that the notices (nine entities) have prima facie engaged in a fraudulent and manipulative scheme resulting in prima facie contravention of provisions of the PFUTP (Prohibition of Fraudulent and Unfair Trading Practices) Regulations, stand confirmed," Securities and Exchange Board of India (Sebi) said in an order on Tuesday.

The nine entities are Jatin Manubhai Shah, Angad M Rathod, Heli Jatin Shah, Daivik Jatin Shah, Ashok Kumar Agrawal, Anshu Aggarwal, Anshul Aggarwal, Hemant Dusad and Anshul Aggarwal Co HUF.

Of these, Sebi has given certain relaxations to four of them.

In its interim order, Sebi found that during the second half of May 2022, false and misleading YouTube videos about Sharpline Broadcast were uploaded on two YouTube channels — Midcap Calls and Profit Yatra. These videos peddled false and misleading news to recommend that investors buy stocks of New Delhi-based Sharpline for extraordinary profits, Sebi said.

These YouTube channels had lakhs of subscribers and the videos had crores of viewership, aided by promotion through paid advertising campaigns.

Following the release of the videos on YouTube, there was an increase in prices and trading volume of the Sharpline scrip. The volumes appear to have been contributed by a large number of retail investors who might have been influenced by the misleading videos.

Sebi classified these entities into categories like creator of YouTube channels, net sellers and volume creators.

The entities orchestrated an egregious case of "pump-and-dump" of Sharpline Broadcast, wherein they collectively helped create trading volumes and interest in the scrip, spread patently false and misleading YouTube videos about the scrip, and hence induced unsuspecting small investors to buy the scrip at elevated prices, Sebi added.