Securities and Exchange Board of India (SEBI) has barred 221 entities from the securities market after uncovering what it described as an 'industrial-scale' stock manipulation scheme spanning five listed companies. The regulator has also ordered the disgorgement of nearly ₹144 crore in illegal gains, along with interest, following a multi-year investigation into an alleged pump-and-dump operation that ran between 2017 and 2020.

In a 394-page final order, SEBI identified individual investor Hanif Shekh as the mastermind behind the scheme, which systematically manipulated share prices and trading volumes before offloading stocks at artificially inflated levels to unsuspecting retail investors.

Five Stocks at the Centre of the Manipulation

According to SEBI, the network targeted five listed companies: Mauria Udyog, 7NR Retail, Darjeeling Ropeway Company, GBL Industries, and Vishal Fabrics. The alleged manipulation began with connected traders executing synchronised and circular trades designed to create artificial demand, driving up both prices and trading volumes in these stocks.

Notably, the same network of intermediary entities reportedly appeared across all five manipulated stocks — a pattern SEBI said pointed to a coordinated, organised operation rather than isolated instances of market abuse.

SMS Campaigns Targeting Retail Investors

Once prices and liquidity had been artificially inflated, the network allegedly launched large-scale SMS campaigns urging retail investors to purchase the targeted shares. SEBI found that messages were dispatched to tens of thousands of investors using sender IDs designed to resemble those of well-known brokerages, lending false credibility to the buy recommendations.

As retail participation increased and prices rose further, a separate group of connected entities allegedly sold their holdings at elevated levels, booking significant profits. The proceeds were then reportedly routed through multiple layers of conduit companies, financiers, and foreign exchange firms before reaching company promoters or entities controlled by Shekh — a structure designed to obscure the trail of ultimate beneficiaries.

Penalties and Enforcement Action

SEBI estimated unlawful gains from the scheme at ₹143.79 crore and directed all involved entities to disgorge the amount along with interest at 12% per annum from October 2020 until payment.

Hanif Shekh has been barred from the securities market for seven years and slapped with a monetary penalty of ₹10 crore. Five entities linked to him have been prohibited from market access for six years and fined ₹2 crore each. Other participants face bans of up to five years, with penalties ranging from ₹5 lakh to ₹1 crore.

How SEBI Built Its Case

The regulator said its investigation drew on an extensive evidence base — including trading records, bank transactions, mobile phone data, WhatsApp conversations, website registration details, and information obtained from telecom operators, travel companies, and financial institutions. SEBI stated that this evidence established Shekh's direct role in running the SMS campaigns and coordinating the broader manipulation network.

What Comes Next

The order sets a precedent for how SEBI approaches coordinated, multi-entity market manipulation at scale. With disgorgement orders now in place, enforcement of recovery — particularly through the layered financial structures used by the network — will be the next test of the regulator's reach. Market observers will watch whether the action deters similar SMS-driven retail targeting schemes, which have recurred periodically in India's small- and mid-cap segments.