Sebi suspends ex-television anchor Hemant Ghai for 5 years

The Securities and Exchange Board of India (Sebi) has imposed a five-year ban on former television anchor Hemant Ghai and his family members for violating regulatory norms. In addition to the ban, Sebi has ordered Hemant and his wife Jaya Ghai to return unlawful gains of Rs 6.16 crore, plus 12 per cent interest per annum starting from March 31, 2020, until the date of the interim order. Furthermore, penalties of Rs 50 lakh each were imposed on Hemant and Jaya Ghai, Rs 30 lakh on MAS Consultancy Service, and Rs 5 lakh on Motilal Oswal Financial Services Ltd (MOFSL).

Sebi found that Hemant Ghai had misused his position as a TV anchor to influence stock prices while his family members engaged in trades prior to his recommendations to profit from them. The regulator highlighted that Hemant’s recommendations on social media and CNBC had a significant impact on the decisions of his followers, affecting the price and volume of the recommended stocks. The whole-time member of Sebi, Ashwani Bhatia, emphasized that Hemant exploited his influence for personal gain.

The regulator’s investigation revealed that a majority of the trades and profits in the accounts of Jaya Ghai and Shyam Mohini Ghai were correlated with Hemant’s stock recommendations on CNBC. Sebi noted that Hemant had control over these accounts, as evidenced by his email, phone number, and bank details being linked to them. Further investigation revealed an attempt to manipulate records through fabricated order instruction sheets and a failure to provide copies of trade messages, suggesting a deliberate effort to conceal the nature of the transactions.

Sebi also found that MAS Consultancy Services, an affiliated authorized person of MOFSL, facilitated Hemant in executing fraudulent trades by allowing him to trade in his family members’ accounts without proper authorization. The intermediary, MAS, permitted Hemant’s trades to be disguised as trades by Jaya and Shyam Mohini, enabling him to benefit from undisclosed information for personal gains. Such actions violate the PFUTP rules prohibiting fraudulent and unfair trade practices.

The investigation focused on trades conducted between January 2019 and May 2020 in the accounts of Jaya Ghai and Shyam Mohini Ghai. Sebi discovered that a substantial portion of these trades aligned with Hemant’s on-air stock recommendations, resulting in significant profits. Following an interim order in January 2021, later confirmed in September of the same year, Sebi impounded illegal gains in February 2022.

A more in-depth probe extended the investigation to include intraday and BTST trades, revealing additional illegal gains of Rs 6.16 crore by the Ghai family. Sebi’s actions underscore the importance of regulatory compliance and transparency in the securities markets to uphold the integrity of the financial system.