New Delhi: The Securities Appellate Tribunal (SAT) has set aside a securities market ban on former TV anchor Hemant Ghai and his family imposed by regulator Sebi for fraudulent trading practices.
However, the appellate tribunal said that the alleged unlawful gain of Rs 2.95 crore made by Ghais will remain in the escrow account during the pendency of the investigation by the Securities and Exchange Board of India (Sebi).
In case, the investigation exceeds beyond the timeline of six months given by Sebi, it would be open to the appellants – Hemant Ghai, his wife Jaya Hemant Ghai and his mother Shyam Mohini – to move an appropriate application for reconsideration of this direction, the SAT said in its order passed on August 25.
The ruling comes after Ghais approached SAT against an order passed by Sebi in July, whereby the regulator disposed of a show cause notice issued to the former TV anchor and his family in February for alleged manipulative trades and decided to re-investigate the matter. It was decided to complete the investigation within six months.
Also, Sebi directed that the deposit of Rs 2.95 crore toward alleged unlawful gain will remain in an escrow account and that the interim order passed in January 2021, restraining Ghais from buying, selling or dealing in securities would continue during the reinvestigation period. The appellants are basically aggrieved by the continuation of the interim order issued in January 2021 that prohibited them from the securities market. The direction was confirmed in September 2021.
In its ruling, SAT said the restraint order cannot continue indefinitely merely on a prima facie basis, otherwise, it would become arbitrary and in violation of the appellants’ fundamental right to trade and do business.
The tribunal noted that Ghais have been restrained from dealing in the securities market since January 13, 2021, and more than 18 months have elapsed and further Sebi has decided to re-investigate the matter for which a timeline of six months has been given.
Accordingly, SAT said, “The interim directions restraining the appellants from buying, selling or dealing in securities either directly or indirectly, in any manner whatsoever is set aside”.
Further, the direction issued against Hemant Ghai to cease and desist, directly or indirectly, any activity related to giving investment advice, sell or buy recommendations, and publishing research reports related to the securities market has also been set aside. The regulator had conducted a preliminary examination of the trades executed by Jaya Hemant Ghai and Shyam Mohini Ghai, which revealed violations of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) rules.
The preliminary examination revealed that Hemant Ghai was buying shares of various companies in the name of his wife and mother on the previous day. He was a financial adviser and was hosting various shows on the TV channel and he would make a recommendation on the next day before the start of the exchange recommending those very stocks which he had purchased the previous day.
As a result of his recommendations on the TV show, fluctuations in those very scrips were noticed in which Hemant Ghai made a recommendation. As a result of this, movement of the trades by other investors Hemant Ghai offloaded the shares, which he had purchased in the name of his wife and mother under the BTST trades, which means, Buy Today Sell Tomorrow and made unlawful gains.