Zerodha shares how SEBI cracked one of the 'most bizarre stock fraud case'

Zerodha shared a fraud that India's Capital markets regulator Stock Exchange Securities Board (SEBI) uncovered recently. 'Markets by Zerodha' shared what it called 'One of the most bizarre stock fraud cases in years' in a post on Twitter. "SEBI just wrapped up one of the most bizarre stock fraud cases in years. And at the centre of it? Not a stockbroker or a backroom operator, but Hemant Ghai, a former CNBC Awaaz anchor millions trusted for market advice," said the X post, followed by a long thread.
At the centre of this case is a former TV anchor Hemant Ghai. Last week, SEBI barred Ghai and his family members from the securities markets for five years for violating regulatory norms. Apart from the ban, SEBI has directed Hemant Ghai and his wife Jaya Ghai to return the illegal gains worth Rs 6.16 crore, along with 12 per cent interest per annum to be calculated from March 31, 2020, till the date of the interim order.

SEBI has also slapped a penalty of Rs 50 lakh each on Hemant Ghai and Jaya Ghai, Rs 30 lakh on MAS Consultancy Service, and Rs 5 lakh on financial services company Motilal Oswal Financial Services Ltd (MOFSL), as it holdHemant Ghais MAS Consultancy & Motilal Oswal responsible for lapses.

SEBI determined that Hemant Ghai, a popular TV anchor with a significant social media following, misused his influential position on CNBC to manipulate stock prices. The regulator found that Ghai's stock recommendations impacted the investment choices of his viewers, subsequently affecting the price and trading volume of the featured stocks. Meanwhile, his family members, namely his wife Jaya Ghai and mother Shyam Mohini Ghai, executed synchronized trades to capitalize on these recommendations for personal profit.
Sebi's whole-time member, Ashwani Bhatia, emphasized in the order that Ghai exploited his privileged role for personal gain. Evidence showed that Hemant maintained operational control over the trading accounts of his wife and mother, with his email, phone number, and bank credentials linked to them. Data from the International Mobile Subscriber Identity Number (IMSI) and App ID confirmed that he accessed Jaya Ghai's bank account, tied to her trading accounts, from his own device. Additionally, call records revealed frequent communication between Hemant and the MAS Consultancy Services dealer responsible for executing these trades, further supporting Sebi's findings.
The regulator also uncovered attempts to conceal the misconduct, including fabricated order instruction sheets and the absence of trade instruction messages, indicating a deliberate effort to obscure the transactions. Sebi concluded that MAS Consultancy Services, an authorized entity affiliated with MOFSL, played a complicit role by allowing Hemant to place unauthorized trades in his wife’s and mother’s accounts and failing to maintain required trade instruction records. This enabled Hemant to disguise his trades as those of Jaya and Shyam Mohini, leveraging insider information for illicit gains, in violation of the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) regulations.
The investigation focused on trades executed between January 2019 and May 2020 in the accounts of Jaya and Shyam Mohini Ghai, revealing that a majority of their trades—81 percent—were tied to Hemant’s on-air recommendations, accounting for nearly 85 percent of their profits. Following an interim order in January 2021, Sebi confirmed its findings in September 2021 and seized the illegal profits in February 2022. A subsequent in-depth probe, expanded to include intraday and Buy Today, Sell Tomorrow (BTST) trades, calculated the Ghai family’s illicit gains at Rs 6.16 crore, as detailed in the regulator’s 76-page final order.