Fraudulent trade: Sebi fines 2 entities Rs 16.5 lakh

Markets regulator Sebi on Friday imposed a total penalty of Rs 16.5 lakh on Anurabh Vanijya Pvt Ltd and Hotahoti Wood Products Ltd for indulging in fraudulent and manipulative trading in illiquid stock options on the BSE.

As per two separate orders, a fine of Rs 11.5 lakh was levied on Anurabh Vanijya, while Hotahoti Wood Products was fined Rs 5 lakh.

The Securities and Exchange board of India (Sebi) conducted a probe in the illiquid stock options segment of the bourse from April 2014 to September 2015 after observing a large-scale reversal of trades.

During the probe, the regulator found that trades executed by the entities were not genuine as they were reversed within few seconds with same counter parties with significant difference in price.

The trades executed by the entities were not genuine and created an appearance of artificial trading volumes, thereby violating PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) regulations, Sebi noted.

The two entities "by engaging in non-genuine transactions, which created a misleading impression of trading in respective contracts, dealt in the stock options contracts in a fraudulent manner," Sebi said in similarly worded separate orders.