sebi:WTM/AN/ISD/ISD-SEC-1/29733/2023-24

SEBI · SEBI · 2023-03-02 · Ananth Narayan G., Whole Time Member

Reviewed by Varun Matlani, Advocate — Securities Lawyer practicing in SAT and SEBI

Facts / Headnote

Interim Order dated March 02, 2023 confirmed with modifications: Noticees restrained from dealing in Sharpline scrip during pendency of investigation; liability for illegal gain borne individually; Noticees 13 and 15 permitted to withdraw INR 1,00,000 per month for medical expenses of their son.

Provisions invoked

Regulations relied on

Parties

Holding

The prima facie findings in the Interim Order dated March 02, 2023 that the Noticees engaged in a fraudulent and manipulative 'pump-and-dump' scheme in the scrip of Sharpline Broadcast Limited, in contravention of Sections 12A(a), (b) and (c) of the SEBI Act read with Regulations 3(1), (b), (c), (d) and 4(1) and 4(2)(a), (d), (k) and (r) of the PFUTP Regulations, stand confirmed, subject to modifications regarding individual liability and medical expense withdrawals.

Full text

Confirmatory Order in the matter of Stock Recommendations using YouTube in the scrip of Sharpline Broadcast Limited Page 2 of 77 S. no. Name of the Noticee PAN

Confirmatory Order in the matter of Stock Recommendations using YouTube in the scrip of Sharpline Broadcast Limited Page 3 of 77 price and volume of Sharpline between April 2022 and mid-May 2022. A significant portion of the volume during this period was the result of the trades executed by some of the Noticees to the Interim Order. 2.3. During second half of May 2022, false and misleading videos (“YouTube Videos”) about the company were uploaded on two YouTube channels namely, “Midcap calls” and “Profit Yatra” (“YouTube Channels”/ “Channels”). These YouTube videos peddled false and misleading news to recommend that investors should buy the Sharpline stock for extraordinary profits. These YouTube Channels had lakhs of subscribers and the misleading videos had crores of viewership aided by promotion through paid advertising campaigns. Subsequently, the misleading YouTube videos ceased to be available for public viewing. 2.4. Subsequent to the release of the misleading YouTube videos, there was an increase in the price and trading volume of the Sharpline scrip. The volumes appear to have been contributed by large number of retail investors likely influenced by the misleading YouTube videos. During this period, certain non- promoter shareholders who held more than 1% of shareholding in Sharpline offloaded their entire holdings at inflated prices and booked profits. 2.5. The Noticees in this case can be broadly classified as follows - the creators of the YouTube Channels - “Midca

Confirmatory Order in the matter of Stock Recommendations using YouTube in the scrip of Sharpline Broadcast Limited Page 4 of 77 collectively helped create trading volumes and interest in the scrip, spread patently false and misleading YouTube videos about the scrip, and hence induced unsuspecting small investors to buy the Sharpline scrip at elevated prices, thereby prima facie violating the provisions of the SEBI Act and PFUTP Regulations. Collectively, the NSs and some of the VCs have booked extraordinary profits as a result of this scheme. 2.7. It was prima facie concluded that the Noticee NSs and certain VCs through the co-ordinated involvement of MMDs and VCs were alleged to have made illegal gains amounting to INR 12,14,24,131 by way of the alleged fraudulent and manipulative scheme and therefore, prima facie violated Sections 12A(a), (b) and (c) of the SEBI Act read with Regulations 3(1), (b), (c), (d) and Regulations 4(1) and 4(2)(a), (d), (k) and (r) of the PFUTP Regulations.

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Source: SecMarx — sebi:WTM/AN/ISD/ISD-SEC-1/29733/2023-24. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.