Market regulator Securities and Exchange Board of India (SEBI) on Wednesday passed an interim ex-parte order banning Hemant Ghai of CNBC Awaaz and two of his family members from recommending stocks. The order comes in the matter of CNBC Awaaz “Stock 20-20” show co-hosted by Hemant Ghai. Incidentally the judgement came just when the channel is celebrating its 16th anniversary.
"Hemant Ghai, Jaya Hemant Ghai (his wife) and Shyam Mohini Ghai (his mother) are restrained from buying, selling or dealing in securities, either directly or indirectly, in any manner whatsoever till further directions. The bank accounts of the entities to the extent of the amount mentioned in the table at Paragraph 53 is impounded. The bank accounts of Mr Ghai, Jaya Ghai and Shyam Mohini Ghai are frozen for debit till further directions/ communications," the order says.
The SEBI order says, “As Mr Ghai was, prima facie, using the trading accounts of Jaya Hemant Ghai and Shyam Mohini Ghai and as discussed earlier, Jaya Hemant Ghai and Shyam Mohini Ghai are also liable for the violations, related to the trades done/facilitated in their accounts by Mr Ghai. Therefore, Mr Ghai, Jaya Hemant Ghai and Shyam Mohini Ghai are prima facie liable, jointly, and severally, for the proceeds generated from the impugned trades.”
The regulator also advised CNBC TV18 inform its viewers of the shows co-hosted by Mr Ghai that SEBI has passed an interim order against him for prima facie violations of its regulation.
According to SEBI, the analysis of the trading pattern of two entities Jaya Hemant Ghai and Shyam Mohini Ghai for the period between 1 January 2019 and 31 May 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 says it conducted a preliminary examination for the relevant period to look into possible violations of provisions of SEBI Act and various regulations framed thereunder including SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (PFUTP Regulations) by Jaya Hemant Ghai and Shyam Mohini Ghai.
Hemant Ghai was hosting various Shows; Stock 20-20 (7:20am between Monday to Friday), Munafe Ki Taiyari Pehla Sauda and Kamai Ka Adda Stock 20-20 is described as a show that features recommendations on certain stocks to be bought and sold during the day.
It was observed that Jaya Hemant Ghai (wife of Hemant Ghai) and Ms. Shyam Mohini Ghai (mother of Hemant 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.
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 Rs2.95 crore just through the limited number of trades examined during the relevant period.
The order adds “Considering the prima facie finding qua his role in the extant matter, there is a high probability that he might continue to misutilise his position as a host of the Show other shows / channels / media giving recommendations / contributing to any activities related to securities market. Thus, there is an imminent threat of continuation of trading activity in furtherance the scheme that has prima facie been found to be in violation of SEBI Act and PFUTP Regulations. Thus, it is urgently required to prevent Mr. Hemant Ghai, Ms. Jaya Hemant Ghai and Ms. Shyam Mohini Ghai, from causing any further harm to the market. So urgent preventive steps are required to be taken.”
As per the order, Hemant Ghai, his wife and his mother are restrained from buying, selling or dealing in securities, either directly or indirectly, in any manner whatsoever till further directions.
Noting that Hemant Ghai is employed with CNBC-TV18 (a network of channels owned by Reliance Industries Ltd), SEBI had ordered the channel to inform its viewers that an interim order has been passed against him.
Several people on Twitter questioned how the channel did not get self declaration letters from analysts that they are not involved in front running.
Hours after the SEBI order, CNBC-Awaaz tweeted a statement that Hemant Ghai has been terminated with immediate effect.