The Securities and Exchange Board of India (SEBI) has started looking into listed companies connected to the ongoing Mahadev Betting App case, which is already being investigated by the Enforcement Directorate (ED), as per sources familiar with the situation. The regulator has come across instances of violations, such as alleged stock manipulation and the illegal funneling of betting profits into the stock markets through the foreign portfolio investor (FPI) route.
“We’ve done some digging and found a case or two,” said someone in the know about the investigation. “These are some pretty creative methods… now money is coming in from abroad, going through the FPI route.”
If further probing confirms potential stock manipulation and breaches of FPI regulations, SEBI will take action against the companies and individuals involved. An email sent to SEBI for comment on the matter didn’t get a response.
ED’s investigation
The Enforcement Directorate is honing in on the money laundering of betting profits overseas by the Mahadev Online Book promoters through a complex network of benami bank accounts. The ED has also uncovered that these funds were subsequently invested in the Indian stock market through FPIs based in Dubai and Mauritius.
During its April searches, the ED found that the funds had been channeled into specific small and medium enterprises (SMEs) to create “artificial price fluctuations” and deceive retail investors. The agency has frozen securities, bonds, and demat accounts totaling over ₹573 crore and confiscated ₹3.29 crore in cash.
Stock manipulation
The seizures exposed that some of these companies’ promoters had utilized betting profits to invest in their own businesses “under the guise of preferential share issuances, selling of promoter-controlled shares, and issuing of share warrants.”
“Throughout the searches, evidence has been found indicating that the companies’ promoters collaborated or conspired with the accused individuals to manipulate the share prices of said companies using ‘tainted money’ to inflate their companies’ valuations through a network of agents and middlemen,” the ED stated.
The investigation is now concentrating on unveiling the complete operation of stock price manipulation by these listed companies—an issue SEBI is also delving into.
Thus far, the ED has carried out over 170 raids in connection with the Mahadev Betting App probe, seizing or attaching assets worth ₹3,002.47 crore. Thirteen individuals have been arrested, and 74 entities have been named in five prosecution complaints filed in the case.
It’s quite a whirlwind of events, with regulators and investigators working tirelessly to uncover the depths of this scandal. Who knew that the stock market could be entangled in such shady dealings? But hey, that’s the world we live in, right? Just when you think you’ve seen it all, another scandal comes to light. Not really sure why this matters, but it’s definitely a juicy story to follow. Let’s see where this all leads.