SEBI Slaps Rs2 Crore Penalty on CNBC Awaaz's Ex-editor Pradeep Pandya, Analyst Alpesh Furiya, Bars 8 from Markets for Fraudulent Trading Activities

Moneylife Digital Team 12 June 2024

Investor Interest

The Securities and Exchange Board of India (SEBI) has imposed a fine of Rs1 crore each on Pradeep Pandya, former markets editor of CNBC Awaaz, and Alpesh Vasanji Furiya, a technical analyst, for engaging in fraudulent trading activities. The penalties follow a comprehensive investigation revealing the duo's involvement in market manipulation. Additionally, they have been barred from participating in the securities market for five years, along with six other entities.

Mr Pandya was the host and co-host of various shows at CNBC Awaaz till August 2021. Mr Furiya appeared on the television channel as a guest and external expert and gave stock recommendations from his X (erstwhile Twitter) handle.

The six other entities—Alpesh Furiya (HUF), Alpa Furiya, Manish Furiya, Manish Furiya (HUF), Mahan Investment, and Toshee Trade—have each been fined Rs10 lakh. SEBI's investigation uncovered that the Alpesh group entities conducted fraudulent trades synchronised with stock recommendations broadcast by Mr Pandya and Mr Furiya on CNBC Awaaz, thus gaining an unfair advantage before the information was publicly disclosed.

In an order, Ashwani Bhatia, whole time member (WTM) of SEBI says, "Many instances have been pointed out in this order where a surge in price and volume that was witnessed the scrips immediately after the recommendations were aired on CNBC Awaaz. When TV anchors engage in sharing material non-public information, as noted in this case, it not only breaches ethical standards but also distorts market dynamics. Such acts of selective information dissemination give unfair advantages to a few, undermining the principle of equal access to information. This erosion of trust can lead to a significant loss of confidence among investors, who may feel that the markets are rigged against them."

"This behaviour not only demonstrates a clear intent to leverage insider information but also reveals a systematic approach to exploiting information asymmetry for personal gain," SEBI stated.

The regulator likened the case to classic front-running, where a trader capitalises on expected price changes due to impending transactions in securities. "In the present case, instead of a single impending trade, Alpesh Furiya was trying to take advantage of multiple impending trades which were reasonably expected to be placed once the recommendation made by a star anchor, Pradeep Pandya, was aired on CNBC Awaaz, an influential business news channel."

Further financial penalties include a directive for Mr Furiya and related entities to disgorge Rs2.4 crore with 12% simple interest per annum, calculated from the end of the investigation period to the date of the interim order. This penalty is in addition to Rs8.4 crore already impounded as part of the unlawful gains totalling Rs10.8 crore made by the Alpesh group entities.

"SEBI emphasised that when TV anchors share material non-public information, it breaches ethical standards and distorts market dynamics. Such selective information dissemination grants unfair advantages, undermining the principle of equal access to information. This erosion of trust can significantly reduce investor confidence, leading to perceptions of a rigged market," the regulator asserted.

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