Sebi’s investigation also showed that a few of these individuals had also been penalised in earlier orders by the regulator.
The Securities and Exchange Board of India (Sebi) has barred 26 individuals from the securities market for alleged price manipulation in the scrip of DU Digital Global, earlier known as DU Digital Technologies, an SME stock.
In a 142-page order, the market regulator has also directed disgorgement of over ₹98.78 lakh identified as illegal gains and imposed a penalty of ₹1.85 crore on the individuals.
What triggered Sebi’s investigation?
Sebi conducted an investigation after suspecting violations following a steep rise in the price of the scrip, from ₹12 per share in August 2021 to a high of ₹296.05 in November 2022.
What did Sebi find during the probe?
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The regulator noted that a group of connected traders had employed “deceptive trading strategies”, contributing to an artificial increase in the price and trading volume of the scrip.
Sebi’s investigation also found that a few of these individuals had been penalised in earlier orders by the regulator.
“When entities such as connected Noticees manipulate prices through coordinated trading, the investors bear the loss. The regulatory response must be sufficiently robust to deter similar conduct and to restore investor confidence in the integrity of SME segment listing and trading,” Sebi said in the adjudicating order.
Why are such trades viewed seriously by the regulator?
The regulator added that synchronised or circular trades serve no economic purpose other than price and volume manipulation and are injurious to the integrity of the securities market.
What was Sebi’s assessment of the price surge?
DU Digital was listed on the NSE’s SME platform in August 2021. Sebi noted that there were no positive corporate announcements that could justify the 2,467 per cent surge in the stock price within a year.
How long are the individuals barred from the market?
The bar on dealing in the securities market imposed on the 26 individuals ranges from one year to 30 months.
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