Sebi fines Rs 10 lakh on 2 entities in illiquid stock options case at BSE

Capital markets regulator Sebi on Wednesday imposed a fine totalling Rs 10 lakh on two entities for indulging in non-genuine trades in stock options on BSE.

In two separate orders, the regulator slapped a fine of Rs 5 lakh each on Shruti Bhalotia Beneficiary Trust and Gladiolus Traders Pvt Ltd.

The orders came after Sebi observed large scale reversal trades in the stock options segment of BSE, leading to the creation of artificial volume in the stock options segment.

In view of the same, the Securities and Exchange Board of India (Sebi) had conducted an investigation into the trading activity in illiquid stock options from April 2014 to September 2015.

Pursuant to the investigation, it was observed that these entities were among the various others, which indulged in execution of reversal trades in stock options segment.

Reversal trades are alleged to be non-genuine in nature as they are executed in normal course of trading, which leads to false or misleading appearance of trading in terms of generating artificial volumes, Sebi said.

By indulging in such trades in stock options, they violated the provisions of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms, it added.

In a separate order, Sebi has slapped a monetary fine of Rs 2 lakh on Rishi Agarwal for flouting insider trading norms in the matter of Varun Beverages.

Agarwal, who was an employee of Varun Beverages at the time of violation, had traded shares of the company during the investigation period from January 2017 to April 2018 and on three occasions, his traded value exceeded Rs 10 lakh.

According to the norms, he was required to make disclosures to the company within two business days. However, he failed to make the disclosures for two trades and made delayed disclosures for one trade, in violation of PIT (Prohibition of Insider Trading) norms.