Sebi Bars Ex-TV Anchor Hemant Ghai and Wife for Fraud, Orders ₹6 Crore Disgorgement
The Securities and Exchange Board of India (Sebi) has banned former CNBC Awaaz news anchor Hemant Ghai, his wife Jaya Hemant Ghai, and his mother Shyam Mohini Ghai from participating in the securities market for five years.
This action comes after Sebi found them guilty of engaging in fraudulent trading practices.
In addition to the ban, Sebi ordered Hemant and Jaya Ghai to disgorge ₹6.1 crore in illegal profits, with 12% simple interest from 31 March 2020.
The market regulator also imposed a fine of ₹50 lakh each on Hemant and Jaya. MAS Consultancy Service was fined ₹30 lakh, while Motilal Oswal Financial Services (MOFSL) was fined ₹5 lakh for their roles in the misconduct.
“When high-profile TV anchors, hired by leading business channels to inform and educate investors, exploit material non-public information for personal gain, they betray the trust that underpins market transparency,” said Sebi’s Whole-Time Member Ashwani Bhatia in the order.
Investigation into Trading Activity
The investigation began in January 2021, following an interim order from Sebi.
The probe uncovered that trades executed through the accounts of Ghai’s wife and mother were closely linked to stock recommendations made by Hemant on his CNBC Awaaz show.
Sebi found that these trading accounts took advance positions in recommended stocks before the recommendations were broadcasted.
This led to noticeable spikes in the volume and price of the stocks, allowing the Ghai family to profit unfairly from the market’s response.
The investigation period extended from 1 January 2018 to 13 January 2021. Sebi determined that Hemant Ghai had direct control over his wife’s and mother’s trading accounts.
His mobile number, email ID, and bank details were linked to these accounts, confirming that he managed their operations.
Sebi also noted that approximately 81% of the trades and about 85% of the profits made by Jaya and Shyam Mohini Ghai were directly tied to Hemant Ghai’s recommendations.
Role of MAS Consultancy and MOFSL
Sebi discovered that MAS Consultancy Service, an “authorized person” affiliated with MOFSL, played a key role in facilitating Ghai’s fraudulent trades.
MAS concealed the misconduct by submitting fabricated order instruction sheets to the regulator.
“By allowing trades placed by Hemant Ghai to be camouflaged as being placed by his wife and mother, MAS provided a cover that enabled him to exploit material non-public information for personal gains,” Sebi’s order stated.
As a result, MAS Consultancy was fined ₹30 lakh for its involvement and failure to maintain proper trade records.
MOFSL was fined ₹5 lakh for its supervisory lapses. Despite receiving alerts from the National Stock Exchange (NSE) regarding potential pump-and-dump activity in Jaya Ghai’s trading account and internal warnings about consistent profits, MOFSL failed to conduct a thorough investigation.
“MOFSL received alerts from NSE regarding potential pump-and-dump activity in Jaya Ghai’s trading account and internal alerts regarding consistent profits,” Sebi noted. However, MOFSL accepted MAS’s denial of wrongdoing without deeper scrutiny, leading to the supervisory failure.
Trading Activity After NSE and MOFSL Alerts
Sebi observed that trading activity in the Ghai family’s accounts stopped abruptly after NSE and MOFSL raised alerts, suggesting an attempt to avoid detection.
Furthermore, after the trading restrictions were lifted in 2022, Jaya Ghai’s profits dropped significantly. This supported Sebi’s conclusion that her trading success had been reliant on privileged information provided by Hemant’s recommendations.
Sebi noted that Hemant Ghai’s position as a TV anchor gave him privileged access to material non-public information.
By using this advantage for personal gain, he breached the ethical standards expected of financial media professionals.
Bombay Dyeing Challenges Stock Exchange Fines
In a separate case, textile giant Bombay Dyeing and Manufacturing Company is disputing penalties imposed by the National Stock Exchange of India (NSE) and the Bombay Stock Exchange (BSE).
The company was fined for allegedly failing to obtain a special resolution from shareholders before appointing an independent director over the age of 75.
In a letter dated 19 March to both exchanges, Bombay Dyeing’s board argued that shareholder approval was not immediately necessary.
The company stated that compliance would have been sufficient if the approval had been secured within three months of the director’s appointment.
Despite contesting the fines, Bombay Dyeing’s board advised paying the penalties under protest while simultaneously seeking waivers from the exchanges.
Experts suggest that the outcome of the waiver applications could influence how listed companies handle similar appointments in the future.
Sebi’s Final Order and Broader Implications
After issuing interim and confirmatory orders against the Ghai family in 2021 and 2022, Sebi launched a re-investigation on 22 July 2022. The regulator released its final order on 19 March 2024.
Sebi’s findings reinforce the importance of transparency and ethical conduct in the financial markets.
The penalties imposed on Hemant Ghai, MAS Consultancy, and MOFSL serve as a warning to financial professionals and intermediaries about the consequences of misusing insider information.
“Anchors have a position of privilege… However, Hemant Ghai unfairly used this privilege to his own advantage,” Ashwani Bhatia stated in the order.
Sebi’s ruling also highlights the growing need for stricter oversight and accountability within the financial media sector to safeguard investor trust and market integrity.
