Sebi slaps Rs 21 lakh fine on 2 brokers for fraudulent trading

Sebi has slapped a fine of Rs 10 lakh each on ISF Securities and Vishwas Securities

Market regulator Sebi today imposed a total penalty of Rs 21 lakh on two entities for alleged fraudulent trade practices in shares of Exedy India Ltd (EIL).

Securities and Exchange Board of India has slapped a fine of Rs 10 lakh each on ISF Securities and Vishwas Securities for executing trades amongst themselves in large quantities and creating artificial volume and price increase in the scrip of EIL.

In addition, the regulator has also imposed Rs one lakh fine on ISF Securities for violating stock broker norms which warranted "imposition of monetary penalty".

"The noticees being Sebi registered stock brokers created artificial volumes, false appearance of trading and generated investor interest in the otherwise thinly traded scrip of EIL," Sebi said in an order today.

Sebi said that both the entities "offloaded their entire shareholding at artificially rigged up prices to gullible investors and after suspension of trading of the scrip by the BSE they do not have an exit opportunity".

The matter relates to a Sebi probe into the dealings in the shares of EIL (erstwhile Ceekay Daikin) which had seen a sharp rise in the price at BSE during the period from April 1 to October 31, 2009.

It was revealed that ISF Securities dealing in its proprietary account and Vishwas Securities dealing through trading member SIC Stocks and Services executed trades amongst themselves in large quantities and created artificial volume and price increase in the scrip of EIL.

Both had also executed self trades which were fictitious in nature, Sebi said.