SEBI Bans CNBC Awaaz's Former Anchor Pradeep Pandya And Others For Five Years Over Fraudulent Trading Practices

The regulatory measures were prompted by an investigation into the trading activities of Pradeep Pandya and his association with Alpesh Furiya, among others. Pandya, who previously served as a host on CNBC Awaaz, was found to have shared confidential information about upcoming stock recommendations with Alpesh Furiya, who then utilized this privileged information to execute trades through his own accounts and related entities.

SEBI's order held that there was systematic exploitation of information asymmetry within the securities market. The investigation revealed a coordinated effort to profit from non-public information. Such actions not only breach ethical standards but also erode investor confidence in the integrity of the market. SEBI held that Pandya violated Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) norms.

Furthermore, the actions of Pandya and Alpesh Furiya violated the SEBI (Prohibition of Insider Trading) Regulations, 2015, which aim to prevent trading based on non-public information that could affect the prices of securities. The investigation revealed a clear instance of insider trading, wherein Pandya shared advance information about stock recommendations with Furiya.

SEBI referred to the Supreme Court's decision in SEBI v. Kanaiyalal Baldev Patel where SC emphasized the significance of "equal access to information" in the securities market. The SC highlighted detrimental effects of unfair practices stemming from information asymmetry.

Further, it referred to the decision of the US Supreme Court in David Carpenter v. United States. The case centered around David Carpenter, a trader who had engaged in securities transactions using information obtained from a columnist for the Wall Street Journal. The US SC's decision, reached through a split 4-4 ruling and subsequently clarified in the case of United States v. O'Hagan, established the misappropriation theory as a basis for determining fraudulent activities in securities trading.

Under the misappropriation theory, individuals commit fraud in connection with securities transactions when they misappropriate confidential information for trading purposes, in breach of a duty owed to the source of the information.

Pandya, Furiya, and the other entities involved have been barred from accessing the securities market and engaging in any trading activities for a period of five years. Additionally, SEBI levied fines on Pandya, Furiya, and the associated entities, totaling Rs 2.6 crore collectively.

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