MC Exclusive: Sebi investigating role of Sanjiv Bhasin, formerly with IIFL Securities, in alleged market manipulation

IIF Securities told Moneycontrol that Bhasin was not a member of its Board of Directors and that his term with the company was discontinued prematurely.

"Mr Sanjiv Bhasin was associated with IIFL Securities as a Consultant on contractual basis. His term was to end on June 30, 2024. However, due to health reasons, Mr Bhasin's contract has been discontinued prematurely with effect from  June 17, 2024. Mr. Bhasin informed us about SEBI's enquiry but the details of the same was not disclosed to us. Hence, we will not able to comment. Please note that he was not a member of the Board of Directors of IIFL Securities Limited or any other group company or affiliates,." IIFL Securities said in a statement.

Bhasin is a familiar face on business TV channels, where he discusses stock ideas and market sentiment.

Initial investigations indicated that Bhasin would direct a private company to buy certain stocks after which he would recommend these stocks on TV. After sufficient retail interest is generated and the stock price moves up, the company would dump the stock. The probe is also looking into the connection between Bhasin and this entity. The actions being probed by Sebi are referred to in market parlance as a ‘pump and dump’ scheme.

Two of the people cited said that Bhasin's digital records over the past few years have provided the regulator evidence of his involvement.

Legal implications

Aaron Solomon, Managing Partner, Solomon & Co, told Moneycontrol that any person making public appearance, providing a recommendation, or offering an opinion concerning securities or public offers through public media must comply with the requirements laid down under Securities and Exchange Board of India (Research Analysts) Regulations, 2014.

The Regulations require that any person appearing as a guest to provide any advice related to stocks shall not deal or trade in securities that he recommends or follows within thirty days before and five days after his appearance and advice. They are also required to disclose their name, registration status and details of financial interest in the company being discussed, if any.

Solomon added that, in case of non-compliance, the expert may be penalised for fraudulent and unfair trade practices under Section 15HA of the Securities and Exchange Board of India Act,1992 with a penalty which shall not be less than five lakh rupees, but which may extend to twenty-five crore rupee or three times the profit made from such practices, whichever is higher.

Usually, in Sebi investigations, gathering evidence from various sources such as personal gadgets happen in the initial stage. After that, depending on the regulator’s findings and submissions made by the person or entity under scrutiny, Sebi issues a showcause notice and then later passes an order that may impose penalties or restrictions on the investigated entity.

Reduced media presence

Recently, Bhasin seems to have reduced his TV appearances. Instead, he has been retweeting his followers' comments that thank him for his stock recommendations. Comments asking why he hasn't been on TV have increased in frequency since June 15. The sources cited said that the market regulator's actions took place around that time.

Sebi has been cracking down on guest experts who come on media platforms, particularly on TV channels, with the intention of manipulating stock prices.