Markets Desk | India’s capital markets regulator Securities and Exchange Board of India (Sebi) has launched a major crackdown in the case of DU Digital Technologies, barring 26 individuals from the securities market and imposing monetary penalties after finding evidence of share price manipulation.
The regulator said the barred entities cannot access or deal in the securities market — directly or indirectly — for up to two years, depending on their level of involvement.
Along with the ban, Sebi ordered:
- Disgorgement: ₹98.78 lakh, along with 12% annual interest from March 31, 2023
- Monetary penalties: totalling ₹1.87 crore
Sebi noted that the amounts represent unlawful gains made during the manipulation period.
A spectacular rally that raised eyebrows
The investigation began after DU Digital’s stock delivered a stunning rally.
- Listing (Aug 26, 2021): ₹12 per share
- March 31, 2023: ₹179.10 per share
- That’s a jump of 1,393%.
At one point, on November 11, 2022, the stock even hit ₹296.05 — nearly 2,467% above its listing price.
DU Digital, originally incorporated as Diva Envitec Filtration Technologies Pvt Ltd, later rebranded itself and is currently listed on the NSE SME platform, which largely caters to smaller, emerging companies.
The price trajectory, combined with unusual trading patterns, prompted Sebi to step in.
What Sebi found in its 142-page order
According to Sebi, the 26 individuals acted as a coordinated group that:
- placed deceptive and circular trades,
- created artificial demand, and
- pushed up both traded volumes and prices of the stock.
The regulator concluded that the trades gave the market a misleading impression that there was strong investor interest in DU Digital — when, in reality, the activity was being orchestrated.
Sebi said such conduct goes against investor protection and market integrity, and violates multiple provisions of securities law.
What the accused said — and why Sebi disagreed
Those named in the order argued that:
- their trades were delivery-based and low volume,
- they were long-term investors, not manipulators,
- having a common broker or address does not prove collusion, and
- Sebi relied too heavily on circumstantial patterns without linking every single trade.
Sebi rejected these defenses, saying the overall trading pattern — timing, counterparties, repeated behaviour and price impact — pointed to deliberate coordination rather than coincidence.
The regulator emphasised that market manipulation is often subtle and spread across multiple trades — and must be judged in totality.
Bigger message to SME market participants
The case has turned the spotlight once again on the SME platform, where sharp price swings are common and liquidity is thin — making it easier for small groups to influence prices.
Market experts say the order is a reminder that:
- extraordinary price rallies invite regulatory scrutiny,
- coordinated trading rings rarely go unnoticed for long, and
- penalties can extend to both bans and financial clawbacks.
For now, Sebi’s directions remain in force, while the barred individuals retain the option to appeal before the Securities Appellate Tribunal.
What’s next?
Sebi has indicated that monitoring in SME-listed stocks will remain tight, especially where price spikes are not supported by fundamentals or disclosures.
As for DU Digital, the regulator has not commented on further action, but said it will continue to track trading behaviour closely to ensure fairness and transparency.
About the author — Suvedita Nath is a science student with a growing interest in cybercrime and digital safety. She writes on online activity, cyber threats, and technology-driven risks. Her work focuses on clarity, accuracy, and public awareness.
