Securities and Exchange Board of India (SEBI), the market regulator on Wednesday, 13 January, 2021, barred CNBC Awaaz Hemant Ghai, his mother and his wife for indulging in fraudulent trading practices. Hemant Ghai is the host and editor of the popular show Stock 20-20 on CNBC Awaaz.
SEBI Under (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 banned Hemant Ghai his Wife and Mother from buying, selling or dealing in securities, either directly or indirectly, in any manner whatsoever till further directions.
Hemant Ghai shall cease and desist from undertaking, directly or indirectly, any activity related to giving investment advice, sell or buy recommendations, publishing of research reports etc., related to the securities market, till further directions as per SEBI.
CNBC TV 18 is also 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.
Why SEBI Banned CNBC Awaaz Hemant Ghai and Family?
In its Interim Order based on prima facie of incidents, SEBI says that upon analysis of trading pattern of Hemant Ghai’s mother and wife for period between January 1, 2019 to May 31, 2020, high correlation was found in the trading of stocks that were recommended on Ghai’s show Stock 20-20.
SEBI’s initial enquiry found that Ghai was hosting/co-hosting various shows like Stock 20-20 (at 7:20 AM, Monday through Friday), Munafe Ki Taiyari Pehla Sauda and Kamai Ka Adda. Stock 20-20 would recommend stocks to be bought/sold that day.
SEBI observed that Ghai’s wife and mother undertook a large number of Buy-Today-Sell-Tomorrow (“BTST”) trades during this period in synchronization with the recommendations made on his 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.
The trades were done through Authorised Person of Motilal Oswal Financial Services Ltd., namely MAS Consultancy, Mehsana –Gujarat.
Trades were executed in the trading accounts of Ms. Jaya Hemant Ghai and Ms. Shyam Mohini Ghai which were prima facie in violation of provisions of SEBI Act and PFUTP Regulations, have prima facie earned proceeds amounting to Rs. 2,95,18,680/-just through the limited number of trades examined during the Relevant Period.
Prima Facie Findings on CNBC Awaaz Hemant Ghai and Family?
As per SEBI prima facie finding, there is a repeated pattern of buying shares in the trading accounts of Ms. Jaya Hemant Ghai and Ms. Shyam Mohini Ghai on the previous day to the recommendations made on the Show hosted by Mr. Hemant Ghai and selling the same immediately after the said recommendation.
These type of trade is very well known in stock market as BTST, BTST stands for Buy Today Sell Tomorrow trades.
What Is BTST ?
To understand BTST trades, one has to refer to the equity trade settlement cycle in the securities market. Settlement of trades in equity shares in the market takes 2 days. It means that if investor does a buy trade on day ‘T’, the shares get credited in his demat account (through his broker) on T+2 day and he has to pay for such trades (through his broker) by T+2 day.
Similarly, when he sells a share, the credit from selling the share reaches his bank account on T+2 day (through his broker) and the shares are debited from his demat account (through his broker) by T+2 day.6. BTST (stands for Buy Today Sell Tomorrow) trades are trades where the investor buys shares on ‘T’ day and sells it on T+1 day i.e., sells before the buy trade is settled, i.e., before the shares are delivered in his demat account and before he makes payment for his purchase of shares.
What this means is that, if an investor buys 100 shares of ‘X’ company on Monday, the shares will be credited to his demat account only on Wednesday. However, he may see that the share price of the company has increased the next day after he has bought the shares i.e.
Tuesday an opportunity has arisen to exit his position and make profit even before getting delivery of the shares and before paying for the shares. So he may sell the shares on Tuesday itself.
Coming back to the prima facie finding of the case by SEBI on CNBC Awaaz Hemant Ghai and Family, SEBI observed there is a repeated pattern of buying shares in the trading accounts of Ms. Jaya Hemant Ghai and Ms. Shyam Mohini Ghai on the previous day to the recommendations made on the Show hosted by Mr. Hemant Ghai and selling the same immediately after the said recommendation.
Mr. Hemant Ghai who is the co-host of the Show which airs on trading days at 7:20 am and it recommends certain stocks to be bought during the day with a target price and a stop loss price.
Thus, prima facie BTST trades were executed in the trading accounts of Ms. Jaya Hemant Ghai and Ms. Shyam Mohini Ghai synchronized with the recommendations given on the Show co-hosted by Mr. Hemant Ghai.
The following table summarizes all BTST trades executed overall in the trading accounts of the aforesaid entities vis-à-vis BTST trades executed in synchronization with the recommendations given on the Stock 20-20 Show co-hosted by Mr. Hemant Ghai.
Other BTST trades, prima facie linked to the recommendations on the show were also observed. Further, recommendations made on Show co-hosted by Mr. Hemant Ghai for subsequent period is under different stages of examination by SEBI.
Below image shows the trades done by Mr. Hemant Ghai and His family after recommendation on his show stock 20-20 on CNBC Awaaz, and the profits earned from the same:
It is observed from the material available on record that buy recommendation for the scrip of Aptech Ltd. was given on the Show co-hosted by Mr. Hemant Ghai on January 9, 2020.12.1.
On January 8, 2020, orders were executed in the trading account of Ms. Jaya Hemant Ghai to buy 52,000 shares of Aptech Ltd. and thereafter the entire 52,000 shares were sold on January 9, 2020 i.e., the buy recommendation day, between 9:15:08 am and 9:22:20 am. The details of the said trades are as follows:
Similarly, It is observed from the material available on record that buy recommendation for the of JK Paper Ltd. was given on the Show co-hosted by Mr. Hemant Ghai, on February 20, 2020.12.
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. and thereafter 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.
Price and Volume Impact on the trading of shares recommended on the show Stock 20-20 By Hemant Ghai:
SEBI also wanted to find out whether there was any impact on the share prices and volumes of stocks recommended on the show “Stock 20-20″ by Hemant Ghai.
Hence, An analysis of price and volume in the scrip was conducted in order to see the effect of the recommendation given on the Show co-hosted by Mr. Hemant Ghai, on the price and volume in the scrip and the following is the prima facie observed by SEBI:
It can be seen from the above table that there has been a significant increase (i.e. 11.28%) in the price of the scrip on previous close to open price basis post buy recommendation for the scrip in the Show.
The increase from the closing price of the scrip on the previous day to the opening price of the scrip on the buy recommendation day is significantly higher than the average daily previous day close to open variation % in preceding 10 days which is (0.08%) and also significantly higher than the average daily previous day close to open variation % in succeeding 10 days which is (0.04%).
It may be noted that the larger market previous day close to open variation, as measured by NIFTY was only 1.06% on the Recommendation day.
Further, the trading volume in the scrip has also increased significantly i.e. 24,60,792 shares on the day of recommendation as compared to the daily average trading volume in the scrip during the preceding 10 days of 2,66,789 shares and the succeeding10 days of 3,33,784 shares.
In light of the aforesaid, prima facie it can be inferred that the recommendation in the Show to buy the scrip had a significant impact on the price, particularly opening price, and volume of the scrip as there was no other material price sensitive corporate announcement supporting the significant price and volume variation in the scrip on the day of the recommendation or the prior day.
Similarly, with respect to the trade executed in the trading account of Ms. Shyam Mohini Ghai in the scrip of TVS Electronics Ltd., it is prima facie, observed from the material available on record that on May 28, 2019 there was a buy recommendation given on the Show co-hosted by Mr. Hemant Ghai in the said scrip with a target price of Rs. 220/-and a stop loss price of Rs. 187/-.
Based on the price and volume analysis in the scrip pursuant to the recommendation given on the Show co-hosted by Mr. Hemant Ghai, following is prima facie observed:
It can be seen from the above table that there has been a significant increase (i.e. 9.57%) in the price of the scrip on previous close to open price basis, post buy recommendation for the scrip in the show.
The increase from the closing price of the scrip to the opening price of the scrip on the buy recommendation day is significantly higher than the average daily previous day close to open variation % in preceding 10 days which was 1.70% and also significantly higher than the average daily previous day close to open variation % in succeeding 10 days which was (0.10%).
It may be noted that the larger market previous day close to open variation, as measured by NIFTY was only 0.28 % on the Recommendation day.
Further, the trading volume in the scrip has also increased significantly i.e. 19,63,831 shares on the day of recommendation as compared to the daily average trading volume in the scrip during the preceding 10 days of 1,23,565 shares and the succeeding 10 days of 2,31,988 shares.
Therefore, from the price-volume analysis of other scrips in which the buy recommendation was given on the Show co-hosted by CNBC Awaaz Hemant Ghai and trades done in the accounts of Ms. Jaya Hemant Ghai/ Ms. Shyam Mohini Ghai that even in the absence of any corporate announcements, there was a significant change in the opening price of that scrip compared to its previous day closing price.
Similarly, there is also a significant increase in the volume of the shares being traded on the recommendation day. This prima facie, discernable increase in price and volume of the recommended scrip on the day of recommendation has taken place frequently over the course of the Relevant Period.
Therefore, it is prima facie, observed, that the preponderance of probability is that a buy recommendation given on the Show co-hosted by Mr. Hemant Ghai, has a significant positive effect on the price and volume of the scrip.
This is not the end there were lot of instance that have lead SEBI gone through the case you can Read the complete SEBI Interim Order Here in case you want.
Conclusion:
From the above observation and investigation done by the market regulator SEBI, prima facie has been clearly found in the case on CNBC Awaaz Hemant Ghai, Wife and Mother, due to which they have been Banned By SEBI till further direction and also not allowed to make any buy/sell in stock market.
Their bank accounts have also been are frozen for debit till further directions /communications. Having said that, what we as an trader and investor need to learn from above case:
- Never follow stock buy/sell tips without doing your own research, specially the one given on television screen for free. There is nothing called a free lunch in this world.
- If you want to get the stock tips or recommendation, you may approach SEBI registered advisory firms or SEBI authorized fund managers or stock brokers.
- Be ‘Aatmanirbhar’ ✌?in other words be self reliant, there are lot of good resources available online, try learning from them. Read good articles, blogs, watch good videos. Do not fall prey on stock tips, better learn and develop new strategies using technical and fundamental analysis by yourself.
- whether you are doing trading or investing please understand, it is about your hard earned money, never take it for granted hence try learning and exploring new things related to same every now and than.
- Avoid chasing stock tips on WhatsApp group chats or telegram or on twitter, Facebook etc.
- Profit or loss both may happen on the trade, whatever happens you need to learn from that, that is why I always insist for a beginner to never place all the money in single trade and avoid using margins or leverage. Trust me this will explode your finance, keep it as low as possible in the start.
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