BSE stock options: Sebi fines 4 entities Rs 22 lakh for fraudulent trade

Markets regulator Sebi Wednesday imposed a total fine of over Rs 22 lakh on four entities for executing fraudulent and manipulative trades in the illiquid stock options segment of BSE.

The entities facing the penalty are -- Shristi Ispat and Alloys Ltd, Sri Narayan Mercantiles, Tarang Stock Broking Services and Abhinandan Vanijya Pvt Ltd -- according to Sebi's separate orders.

While Sri Narayan, Shristi Ispat and Abhinandan Vanijya were fined Rs 5 lakh each, Tarang Stock was levied a fine of Rs 7.5 lakh, totalling Rs 22.5 lakh.

After observing large scale reversal of trades in stock options segment of the bourse, the Securities and Exchange Board of India (Sebi) conducted an investigation between April 2014 and September 2015.

The probe found that around 81 per cent of all the trades executed in the segment were non-genuine in nature and the four firms were among the various entities that executed such trades by reversing trades with same entities on the same day with wide variation of price.

The four entities "by engaging in such non-genuine transactions, created a misleading impression of trading in respective contracts while dealing in stock options contracts in a fraudulent manner," Sebi noted.

By doing so, the entities violated PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms and the violation warrants imposition of monetary penalty, Sebi said.

In a separate order, Sebi levied a fine of Rs 10 lakh on Goldline International Finvest for failing to provide information sought by the regulator in the matter of Channel Nine Entertainment Ltd.

Sebi had sought information from Goldline with regard to receiving IPO (Initial Public Offering) proceeds of Channel Nine.

However, Goldline failed to provide information and also failed to reply to the summons issued by investigating authority after seeking extension of time, Sebi said.

"Such blatant non-submission with complete disregard to the sensitive nature of investigation in the matter of IPO constituting non-compliance of... summons cannot be viewed leniently," the regulator said while imposing fine.