MC exclusive: SEBI conducts search-and-seizure operations at Mansi Share, Sunshine Capital

Investors alerted the regulator about a possible foul play and SEBI's surveillance department took a closer look at the price movements.

The market regulator, Securities and Exchange Board of India (SEBI), has conducted search-and- seizure operations at various offices of Mansi Share and Stock Advisors, and entities related to the listed company Sunshine Capital and its promoters, according to sources.

The operations were part of the SEBI's investigations into an alleged pump-and-dump operation done in the scrip of Sunshine Capital, a non-deposit taking non-banking financial company (NBFC).

The search-and-seizure operation, which started early in the morning on December 6 and ended in the evening the following day, was conducted primarily in Mumbai, Delhi and Surat, a source told Moneycontrol.

Moneycontrol has written to both Mansi Share and Sunshine Capital. This article will be updated as and when they respond.

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In earlier interactions with Moneycontrol, legal experts had said that search-and-seizure operations are more serious than standard inquiries from the regulator. These operations can involve more intrusive examinations and may imply more serious allegations.

What's the probe all about?

In this instance, the sources said, the SEBI had received investors' complaints after sharp price movements in Sunshine Capital's stock.

Initially, the stock rocketed by up to 300 per cent over the first few months of this year, and later dropped by around 25 per cent in the next 15 days. The stock went from around Rs 1 to Rs 4 between January 2024 and March 2024, and then fell to around Rs 3 by early April.

The stock, which has since fallen by 50 per cent from its 52-week high of Rs 4.13, is trading at around Rs 2. The scrip is under the additional surveillance measure (ASM). Regulatory communications have said that shortlisting of securities under ASM is on account of market surveillance and should not be construed as an adverse action against the company.

Sources said  that when the price of the stock rose sharply earlier this year, there were several social media posts on Sunshine Capital to generate investors' interests. Soon, the stock began to drop rapidly and investors, who were stuck without buyers, filed a complaint with the SEBI.

Investors alerted the regulator about an alleged foul play and the SEBI's surveillance department took a closer look at the price movements. The  SEBI officials found a reason for further investigation, leading to the search-and-seizure operation.

Dodgy past instances
To be sure, Mansi Share has been investigated by the regulator for various violations over the years.

In January 2023, the stock broker was asked to pay a penalty of Rs 10 lakh for poor compliance. The regulator had also taken note of repeat violations of poor compliance. According to an earlier order from June 2020, Mansi Share was asked to pay a penalty of Rs 13 lakh for a similar offence.

Prior to this, the broker had been investigated following allegations of facilitating self-trades by an entity. Self trades are when the same entity is the buyer and seller in a trade. This activity can arouse the suspicion of the regulator as the broker comes under the scanner for manipulating stock prices.

In all these instances, which occurred between 2014 and 2018, no action was taken against stock broker.