SEBI Penalises 18 Entities, Imposes ₹2.8 Crore Fine in Retro Green Revolution Stock Manipulation Case
Market Regulator Bars Entities for Up to Five Years, Orders Disgorgement of Unlawful Gains
New Delhi, March 18: The Securities and Exchange Board of India (SEBI) has imposed penalties totalling ₹2.8 crore on 18 entities and barred them from accessing the securities markets for up to five years for their involvement in manipulating the share price of Retro Green Revolution Ltd (RGRL).In addition to the monetary penalty, SEBI has directed 15 of these entities to disgorge unlawful gains amounting to ₹2.94 crore. The amount will carry an interest of 12 percent per annum from December 31, 2021, until the date of payment. The regulator has instructed that the funds be deposited into SEBI’s Investor Protection and Education Fund within 45 days.
Premeditated Scheme to Inflate Illiquid Stock Identified
In a 61-page order issued on Tuesday, SEBI found that the entities were part of a premeditated scheme designed to artificially inflate the price of RGRL, an illiquid stock, and attract unsuspecting investors.The regulator observed that the manipulation involved coordinated trading among related entities to create artificial volumes in the scrip. This was followed by the circulation of stock tips and recommendations through a Telegram channel to influence investor behaviour.
Key Role of Choksi Group Highlighted
According to the order, the first six noticees, including Sanjay Arunkumar Choksi, were actively involved in creating a misleading appearance of trading and manipulating the stock price.SEBI noted that the Choksi Group, led by Sanjay Choksi, played a central role in the scheme. Although Choksi was no longer officially listed as the promoter of RGRL, the regulator found that he continued to exercise control over the company, with statutory payments being made from his account.
SEBI’s Quasi-Judicial Authority Santosh Shukla stated in the order that Choksi did not act in good faith and exploited his influence within the company for personal gains.
Telegram Tips and Artificial Volume Misled Investors
The regulator emphasised that the sudden increase in trading volumes in an otherwise illiquid stock, combined with recommendations circulated on Telegram, were significant indicators that influenced investor decisions.SEBI noted that these actions enabled certain entities to offload illiquid shares onto retail investors, resulting in unlawful gains exceeding ₹2.94 crore.
Penalties Imposed Under PFUTP Regulations
Following the investigation, SEBI concluded that all 18 entities had violated provisions of the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) regulations.Penalties imposed on the entities ranged between ₹5 lakh and ₹50 lakh, depending on their level of involvement in the scheme.
Investigation Timeline and Regulatory Action
The investigation covered trading activities in RGRL shares between September 1, 2020, and December 31, 2021. The probe aimed to determine whether stock recommendations circulated via a Telegram channel were linked to fraudulent trading practices.Subsequently, SEBI issued a show cause notice to the entities on November 8, 2024, before passing the final order confirming violations and enforcing penalties.
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