Mumbai | The Securities and Exchange Board of India (SEBI) has taken major enforcement action in an alleged ₹143.79-crore pump-and-dump stock market scam, barring 221 entities, including alleged mastermind Hanif Shekh, from the securities market for up to seven years. The market regulator has also imposed a ₹10-crore monetary penalty on Shekh and directed all entities involved to disgorge the alleged unlawful gains along with applicable interest.
According to SEBI’s 394-page final order, a coordinated network manipulated the share prices and trading volumes of five listed companies between 2017 and 2020. The scheme allegedly involved artificially inflating stock prices through synchronised trades before sending bulk SMS messages recommending the shares to retail investors. As unsuspecting investors entered the market, entities linked to the operation allegedly offloaded their holdings at inflated prices, earning substantial profits while leaving later investors exposed to significant losses.
SEBI stated that the alleged unlawful gains of ₹143.79 crore were routed through multiple intermediary companies and conduit entities in an apparent attempt to conceal the identity of the ultimate beneficiaries. The investigation uncovered a complex web of financial transactions and coordinated fund transfers designed to disguise the flow of illicit proceeds.
The five listed companies identified in the investigation are Mauria Udyog Ltd, 7NR Retail Ltd, Darjeeling Ropeway Company Ltd, GBL Industries Ltd and Vishal Fabrics Ltd. According to the regulator, Hanif Shekh allegedly orchestrated the operation with the assistance of more than 200 interconnected entities that worked together to inflate share prices before disposing of their holdings at artificially high valuations.
SEBI said the network assigned different roles to participating entities. Some allegedly influenced investor sentiment, others carried out synchronised trading to create artificial demand and price movements, while another group disposed of shares at inflated prices to generate profits. Although the entities appeared unrelated on paper, the investigation found evidence suggesting coordinated activity among them.
In its order, SEBI described the operation as significantly more serious than routine market misconduct. The regulator observed that the scale of coordination, the structured layering of financial transactions and the systematic concealment of beneficiaries undermined the integrity of India’s securities market and eroded investor confidence.
As part of the enforcement action, Hanif Shekh has been debarred from accessing the securities market for seven years. Five entities associated with him have been barred for six years and fined ₹2 crore each. Several other noticees have also been prohibited from trading in the securities market for varying periods, with penalties ranging from ₹5 lakh to ₹1 crore depending on their respective roles.
In addition, SEBI has directed all noticees to disgorge the alleged unlawful gains amounting to ₹143.79 crore together with 12 per cent annual interest. The interest will be calculated from October 21, 2020, until the entire amount is repaid.
The final order follows SEBI’s interim order-cum-show-cause notice issued in June 2023, when the regulator had temporarily barred Hanif Shekh and 225 other entities from the securities market and ordered the impounding of the alleged unlawful gains. Following the completion of its investigation, SEBI has concluded that the case represents a highly coordinated stock manipulation operation that seriously affected market integrity and investor confidence.
