The Securities and Exchange Board of India (SEBI) has begun investigating listed companies linked to the ongoing Mahadev Betting App case, which is already under scrutiny by the Enforcement Directorate (ED), according to sources with direct knowledge of the matter.
The regulator has found instances of violations, including alleged stock manipulation and the illicit routing of betting proceeds into the equity markets through the foreign portfolio investor (FPI) route.
“We have already looked into the matter and found one or two cases,” said a person aware of the probe. “These are innovative methods… now the money is coming in from overseas, being routed through the FPI route.”
If further investigation substantiates potential stock manipulation and breaches of FPI norms, SEBI will take action against the implicated companies and individuals.
An email sent to SEBI seeking comment on the matter did not elicit a response.
ED’s findings
The Enforcement Directorate’s probe is focused on the money laundering of betting proceeds offshore by the promoters of Mahadev Online Book through a complex web of benami bank accounts. The ED has also discovered that these funds were subsequently invested in the Indian stock market via FPIs based in Dubai and Mauritius.
In its April searches, the ED found that the funds had been funnelled into certain small and medium enterprises (SMEs) to cause “artificial price fluctuations” and defraud retail investors. The agency has frozen securities, bonds, and demat accounts valued at over ₹573 crore and seized ₹3.29 crore in cash.
Stock manipulation
The seizures revealed that promoters of some of these companies had used betting proceeds to invest in their own firms “under the guise of preferential share issues, sale of promoter-controlled shares, and issuance of share warrants.”
“During the searches, evidence has been recovered to suggest that the promoters of such companies collaborated or colluded with the accused persons to manipulate the share prices of such companies using ‘tainted money’ to raise their companies’ valuations through a string of agents and middlemen,” the ED said.
The investigation is now focused on uncovering the complete modus operandi of stock price manipulation by these listed companies—an issue SEBI is also examining.
So far, the ED has conducted over 170 raids in connection with the Mahadev Betting App investigation, seizing or attaching assets worth ₹3,002.47 crore. Thirteen people have been arrested, and 74 entities have been named in five prosecution complaints filed in the case.
Published on May 4, 2025
