Sebi bars 59 entities for suspicious and non-genuine trades in options of individual stocks

Sebi to carry out further investigation in the matter

Stock market regulator Securities and Exchange Board of India (Sebi) has barred a total of 59 persons/entities from dealing in the stock market after its investigation found suspicious and non-genuine trades in options of individual stocks which are thinly traded. The investigation pertained to trades done on BSE in options of individual stocks during the period from 1 April 2014 to 31 March 2015. As per Sebi's investigation, the loss-making entities were deliberately making repeated loss through their reversal trades in stock options and the profit-making entities were facilitating them by becoming their counterparties and were acting in concert with a common object of intended execution of these suspicious and non-genuine trades. The loss making entities sold illiquid stock options at prices less than their intrinsic value. The reasons for executing such trades by these entities could be showing artificial volume and trading interest in these instruments or tax evasion or portraying artificial increase in net worth of a private company/individual, Sebi said in its ad interim ex-parte order barring 59 entities from dealing in stock market.

Sebi said that a detailed investigation of the entire scheme employed in this case is necessary to find out the rationale of entities to indulge in suspicious/artificial trades including tracing the fund trail and the role of intermediaries in allowing such fictitious trades to enter the system. Sebi will issue a final order after carrying out further investigation.

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