Sebi bars 22 entities for options manipulation

The market regulator found these entities putting through 'reversal trades' in the stock options segment

The Securities and Exchange Board of India (Sebi) has restrained 22 entities, mostly brokers, from the securities market for allegedly making illicit gain through manipulation of liquid stocks' options.

Sebi found these entities putting through ‘reversal trades’ in the stock options segment. The manipulation typically took in deep in-the-money and out-of-the-money options on individual stocks that were thinly traded. In fact, 70-100 per cent of the volumes in these counters were by the alleged manipulators, it said.

According to Sebi, entities through reversal trades generated a total loss of Rs 1,273 crore and total profit of Rs 1,303 crore. “These brokers have, prima facie , facilitated their clients to use and employ a pre-meditated manipulative device or contrivance while dealing in the market, a...non-genuine and deceptive transaction,” said Rajeev Kumar Agarwal, member of Sebi, in an order.

Some of the entities barred are Giriraj Stock Broking, Best Bull Stock Trading, Odyssey Securities and Mousumi Deb Roy. The move is part of actions by the markets regulator against entities manipulating the bourses' for avoiding of taxing or making illegal gains. Sebi, however, has allowed the 22 entities to continue to function as stock brokers for existing clients in the cash segment.

Sebi has also asked the exchanges to conduct “focused inspection” of the trading members involved and take correctives, if required, with a report to it within six months.