SEBI has imposed market restrictions on 26 individuals in connection with price manipulation in SME share DU Digital Global. The regulator has levied a fine of ₹1.85 crore and ordered the return of illegal gains amounting to ₹98.78 lakh.
Share Market: The Securities and Exchange Board of India (SEBI) has taken strict action against 26 individuals for alleged price manipulation in the shares of DU Digital Global Limited, a company listed in the Small and Medium Enterprises (SME) segment. SEBI has prohibited these individuals from accessing the securities market. Additionally, a total fine of ₹1.85 crore has been imposed on them, and they have been ordered to return illegal gains of ₹98.78 lakh.
This action was taken through a detailed order spanning 142 pages. The regulator stated that investor interests have been severely compromised in this matter, and b measures were necessary to maintain the credibility of the SME segment.
Investigation Began with Unusual Share Price Surge
SEBI’s investigation commenced when an extremely rapid and unusual increase was observed in the shares of DU Digital Global. In August 2021, the share was trading at approximately ₹12 per share. Subsequently, by November 2022, its price had risen to a peak of ₹296.05.
This significant increase in a short period drew the attention of the market regulator. SEBI suspected that this surge was not due to normal market factors but rather the result of a pre-planned activity. Based on this, the share’s trading activities, volume, and the roles of associated traders were thoroughly investigated.
Coordinated Trading and Fraudulent Strategies
During the investigation, SEBI found that a group of connected traders engaged in coordinated trading. These traders employed circular trading and other fraudulent trading strategies, resulting in an artificial increase in the share price and trading volume.
According to SEBI, these activities had no genuine economic purpose. Their objective was solely to mislead the market and artificially inflate the share price. This created the illusion among common investors that there was actual demand for the company’s shares, while in reality, the demand was fabricated.
Some Accused Previously Penalized
SEBI’s investigation also revealed that some of the 26 individuals against whom this action has been taken have previously been penalized in other cases by the regulator. Despite this, they violated market rules and compromised investor trust.
SEBI described this as serious negligence and deliberate misconduct. The regulator believes that a strict stance against repeat offenders is necessary to maintain discipline in the market.
Loss to Investors and Impact on the Market
SEBI clearly stated in its order that when such entities and individuals manipulate prices through coordinated trading, the direct loss is borne by common investors.
Investors investing in the SME segment often make decisions based on limited information. If such fraud occurs with share prices in this segment, investor confidence weakens. This can affect the credibility of the entire market.
SEBI’s Stern Remarks and Regulatory Message
SEBI stated in its order that the regulatory response to such activities should be b. The objective is not only to punish the guilty but also to prevent such conduct in the future.
The regulator also stated that maintaining the integrity of listing and trading in the SME segment is extremely important. If investor confidence falters in this segment, it may become difficult for small and medium enterprises to raise capital.
SEBI’s Clear Stance on Circular Trading
SEBI clearly stated that circular trading does not generate any economic benefit other than manipulation of price and volume. It is merely a means of confusing the market.
Through this order, SEBI has sent a message that it will not compromise on transparency and fairness in the market. Whether it is a case involving the SME segment or the main market, action will be taken against rule breakers.
