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SEBI prohibits research analyst, Gautam Khandelwal from accessing capital market

Published: Feb 24, 2017

By TIOLCORP News Service

MUMBAI, FEB 24, 2017: REGULATOR SEBI on Thursday barred Gautam Sanjay Khandelwal from capital markets till further directions for being involved in manipulative transactions and misuse of the securities market. Besides, Khandelwal carried out research analyst activities without obtaining regulatory approval. By indulging in such activities, Khandelwal has violated research analysts regulations and PFTUP (Prohibition of Fraudulent and Unfair Trade Practice) norms.

The decision comes after SEBI received investor complaints alleging SMSes from certain numbers with fake or bogus recommendations on trading. A preliminary examination of trades conducted by SEBI found that Khandelwal sent SMSes recommending purchase of Supreme Tex Mart Ltd (STML) shares. The messages, attempted to induce investor interest in the scrip, were misleading as details regarding poor financial fundamentals of the company-the fact that STML was a sick company -were not revealed.

Khandelwal took contra position in the STML scrip and sold shares of the company during the same time as he was sending messages recommending purchase of the scrip, SEBI noted. "I am of the considered view that the scheme, plan, device and artifice employed in this case is prima facie a fraud in the securities market inasmuch as it involves manipulative transactions in securities and misuse of the securities market," SEBI Whole-Time Member G Mahalingam said in an interim order.

"The STML scrip's volume and price were manipulated by inducing gullible and genuine investors to trade in the scrip in contravention of provisions of the SEBI Act and regulations thereunder." Besides, SEBI said, "Khandelwal is not registered with SEBI in any capacity, either as an investment advisor or as a research analyst. The characteristics and features of the business activity carried out by Khandelwal prima facie leads to the conclusion that the entity is providing services of research analyst".

In an order passed on Thursday, SEBI has prohibited Khandelwal "from buying, selling or dealing in securities, directly or indirectly, or in any manner whatsoever, till further directions".

Also, it has directed him "to cease and desist from disseminating news or messages in any form related to the securities market, by any means whatsoever". SEBI has directed Khandelwal to remove all brochures, advertisements and documents with the regard to the scheme.

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