SEBI Restrains 19 in Osiajee Texfab Manipulation Case; Coordinated Stock Price Inflation Uncovered

SEBI Restrains 19 in Osiajee Texfab Manipulation Case; Coordinated Stock Price Inflation Uncovered​

The Securities and Exchange Board of India (SEBI) has issued an ex-parte interim order, alleging a coordinated scheme involving the management of Osiajee Texfab Ltd (OTL), its stockbroker Shreni Shares Ltd (SSL), and various connected entities. The regulator stated that there is prima facie evidence demonstrating artificial manipulation of the company's stock price through misleading corporate announcements and concentrated trading patterns.

In a 53-page interim order issued on July 10, Whole Time Member K V R Murty confirmed these findings. SEBI alleges that the coordinated scheme was designed to artificially inflate the share price of OTL and deliberately mislead investors about the company's genuine business prospects.

SEBI Finds Evidence of Coordinated Scheme in Osiajee Texfab Stock Manipulation​

The investigation conducted by SEBI revealed several connecting elements among the involved parties, suggesting a systematic effort to manipulate market sentiment. These findings included concentrated trading executed by a small group of entities and the common utilization of a single intermediary for placing trades.

Further scrutiny highlighted overlapping control between OTL and a branch of SSL. The regulator also noted shared office infrastructure and fund transfers between the noticees, coupled with synchronized trading patterns across related parties.

SEBI conducted simultaneous surprise inspections at various offices, including those belonging to Osiajee Texfab in Hoshiarpur, Shreni Shares' Kandivali office, and SSJFL's Marine Lines office.

Sharp Rally Under Scrutiny; regulator Questions Lack of Material Developments​

The investigation revealed that OTL had no textile or fabric business operations, with all income being generated through its wholly owned subsidiary, OAFL, which is engaged in eucalyptus plantation. SEBI also observed that the husband of OTL's managing director worked as a dealer for SSL in Hoshiarpur.

The regulator noted a dramatic increase in the stock price over 245 trading days. Osiajee Texfab's share surged from Rs 50.40 on January 30, 2025, to Rs 474.80 on January 27, 2026, marking a gain of more than 840 percent.

Despite the sharp rally, SEBI found no significant corporate developments during that period that could have justified such a massive increase in value. WTM Murty stated that the price rise appeared significantly influenced by connected entities whose trading activities contributed substantially to the market positive movement.

Focus on Misleading Disclosures and Connected Entities​

SEBI further alleged that OTL disseminated misleading information regarding its business activities, effectively causing the market price to no longer reflect genuine demand and supply. The findings indicate these manipulative activities were not isolated incidents but appeared part of a coordinated and continuing scheme.

The regulator also zeroed in on the conduct of Shreni Shares Ltd (SSL). SEBI noted that after carrying out site visits on May 20, 2026, the broker sold its entire holding in Osiajee Texfab within seven trading sessions. This sale allegedly resulted in wrongful gains amounting to Rs 82.56 lakh.

Shreni Shares Brokerage Examined for Conduct and Improper Timing​

The timing of the stock sale was scrutinized closely by SEBI. The regulator expressed serious apprehension that the proceeds derived from the alleged violations might be dissipated, diverted, or rendered unavailable for future disgorgement or restitutionary proceedings unless immediate preventive action is taken.

WTM Murty emphasized that continued trading in OTL shares based on manipulated prices and misleading information could result in serious prejudice to innocent investors and potentially undermine the integrity of the securities market.

Regulatory Action: Restraints Issued as Investigation Continues​

Pending the completion of the full investigation, SEBI has imposed restraints on all 19 noticees, prohibiting them from dealing in Osiajee Texfab shares. The regulator has also directed Shreni Shares to deposit the alleged wrongful gains of Rs 82.56 lakh into a fixed deposit with a lien marked in SEBI's favour within 15 days.

The broker's conduct is subject to separate examination for potential violations of the SEBI (Stock Brokers) Regulations. All noticees have been given 21 days to file their replies and request a personal hearing before the regulator.