TV Anchor Made Rs. 2.95 Cr By Buying Stocks In Advance Of BTST Recommendations

Hemant Ghai, the well-known TV Anchor of the show 'Stock 20-20' is alleged by SEBI to have illegally made Rs. 2.95 Cr. His family members bought the stocks in advance of the recommendation by him for BTST in the show. The stocks were dumped when the price rose after the show

'Stock 20-20' is a popular programme on CNBC Awaaz where the hosts make recommendations of the stocks which should be bought or sold.

The programme is very eagerly watched by investors and punters because the stocks usually surge immediately after the recommendation is made.

Unfortunately, it appears that all or some of the anchors were conducting an illegal 'front-running' exercise i.e. they would buy the stocks in the name of their family members in advance of the recommendation and sell them immediately after the show is aired.

Earlier, some vigilant observers had noted that something was amiss. They had raised the alarm.



Now, Hemant Ghai, one of the anchors of the show, has been implicated by SEBI.

"Analysis of the trading pattern of 2 entities viz. Ms. Jaya Hemant Ghai and Ms. Shyam Mohini Ghai for the period between January 1, 2019 to May 31, 2020, high correlation of the trades of the aforesaid entities was observed with the recommendations furnished in the show Stock 20-20 aired on news channel CNBC Awaaz," SEBI has held in an interim order.

"Ms. Jaya Hemant Ghai and Ms. Shyam Mohini Ghai have undertaken a large number of Buy-Today-Sell-Tomorrow (“BTST”) trades during the Relevant Period in synchronization with the recommendations made in the Show. Shares were bought on the previous day to the recommendations being made on the stock 20-20 show and sold immediately on the recommendation day," it was noted.

Ms. Jaya Hemant Ghai is the spouse of Mr. Hemant Ghai and Ms. Shyam Mohini Ghai is his mother.



Madhabi Puri Buch, the Whole Time Member of SEBI, conducted the pain-staking investigation.

She has given a number of examples to establish the prima-facie case that there was 'front-running'.

One instance is where Hemant Ghai gave a recommendation to buy JK Paper Ltd on on February 20, 2020. A day before, i.e. on February 19, 2020, orders were executed from the trading account of Ms. Shyam Mohini Ghai to buy 2,00,000 shares of JK Paper Ltd. The entire 2,00,000 shares were sold on February 20, 2020 i.e., the recommendation day, between 9:15:15 am and 9:31:49 am.

"Thus, buy positions were created by placing orders in the trading account of the entities in the respective scrips one day prior to the recommendations being given on the Show co-hosted by Mr. Hemant Ghai. These buy positions have been exited by selling the said shares, on the recommendation day at a price higher than at which the shares were bought just a day before, thereby generating significant proceeds ... It is therefore, prima facie observed that this pattern of BTST trades were executed repeatedly in the trading accounts of Ms. Jaya Hemant Ghai and Ms. Shyam Mohini Ghai, synchronised with the recommendations given on the Show co-hosted by Mr. Hemant Ghai," SEBI has held.

Ms. Buch has explained in clear the modus operandi of the scheme allegedly employed to execute trades while prima facie taking unfair advantage of having unpublished information:

1. The Show co-hosted by Mr. Hemant Ghai will give a buy recommendation in a particular scrip.

2. Having advance information of the aforesaid, a substantial number of shares would be bought by executing buy orders in the trading account of Ms. Jaya Hemant Ghai / Ms. Shyam Mohini Ghai, a day prior to the recommendation day.

3. On the recommendation day, the recommendation is made on the Show starting at 7:20 am.

4. As soon as the market opens, sell trades would be executed in the trading accounts of Ms. Jaya Hemant Ghai / Ms. Shyam Mohini Ghai taking advantage of the buying interest created by the recommendation and resultant significant price and volume rise.

She has also held that this is a fraudulent scheme/unfair trade practice which is in violation of the provisions of SEBI Act and Regulations.

"In view of the aforesaid discussion, it is observed that the scheme employed by the entities to execute the impugned trades does not prima facie, conform to the ethical standards and fair and transparent principles of dealing in the securities market.Hence, it is prima facie, observed that Mr. Hemant Ghai, Ms. Jaya Hemant Ghai and Ms. Shyam Mohini Ghai have prima facie indulged in an unfair trade practice in the securities market. The same has resulted in prima facie violation of provisions of regulation 4 (1) of PFUTP Regulations," it is held.

The gains made by the trio from the alleged front-running has been computed at Rs. 2.95 crore.



Ultimately, SEBI has passed a series of interim orders which includes impounding all the bank accounts of the three persons. They have also been prohibited from any dealings in the stock market.

CNBC TV 18 has also been advised to appropriately bring to the notice of the viewers of the shows co-hosted by Mr. Hemant Ghai that SEBI has passed an interim order against him for prima facie violations of SEBI(Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003.

Update:

CNBC Awaaz has stated that it has terminated with immediate effect the employment of Mr. Hemant Ghai.



Click here to download the order from SEBI's website