Fraudulent trade: Sebi imposes Rs 7 lakh fine on individual

Markets regulator Sebi today slapped a penalty of Rs 7 lakh on an individual for manipulative trading in the shares of Out of City Travel Solutions Ltd (OCTSL).
The regulator imposed the fine on Lakhi Prasad Kheradi after finding that he violated various provisions of Sebi PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) Regulation and Sebi Act.
A probe conducted by Securities and Exchange Board of India (Sebi) in the share trading of OCTSL, earlier known as Tilak Finance Ltd, between July 2012 and February 2013 found that the price of the scrip of the firm moved from Rs 10.19 to Rs 187.40, registering an increase of Rs 177.21 or 1739.06 per cent.

It was alleged that Kheradi executed irregular and manipulative trades in the scrip of OCTSL by contributing to the total market net LTP (Last Traded Price) and NHP (New High Price) and intended his trades to operate as a device to create false, misleading appearance of trading and manipulated price of the scrip.
The regulator noted that it took 4,062 trades in 48,48,281 shares of OCTSL to result in the increase of net LTP of Rs 177.21 and Kheradi's contribution in such increase was Rs 85.35 through persistent trades in small quantity of 152 shares.
The regulator also said that by trading on 9 occasions (including 2 self-trades) for 1 share each for the total value of 9 shares within a span of two weeks, between February 13, 2013 to February 27, 2013, Kheradi contributed to 9.17 per cent of the total market NHP.

"Considering the trading pattern of the noticee (Lakhi Prasad Kheradi) and the method and manner of placing the orders, I am of the view that the noticee had executed irregular trades to inflate the share price by trading in small quantities for as low as 1 share above the last traded price consistently over a period of time," Sebi Adjudicating Officer S V Krishnamohan said in an order.

"The noticee created false, misleading appearance of trading and manipulated the price of the scrip of OCTSL and thereby misled the gullible investors," Krishnamohan, who is also the Chief General Manager, said.

"I find that the charges levelled against the noticee... stand established," he added.
In two separate orders, the regulator also dismissed cases against VRP Financial Services Pvt Ltd and Insight Multitrading Pvt Ltd after finding that the two firms did not execute irregular and manipulative trades in the scrip of OCTSL.