Fraudulent trades: Sebi slaps Rs 45 lakh fine on two entities

Markets regulator Sebi today imposed a total penalty of Rs 45 lakh on Blue Peacock Securities and Yes Investments for indulging in fraudulent activities while dealing in securities.
In two separate orders, Sebi said that the allegations of violation of provisions of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) Regulations against the two entities "stand established".
While the regulator imposed a fine of Rs 25 lakh on Blue Peacock Securities, it levied a penalty of Rs 20 lakh on Yes Investments.
Sebi's latest order in the matter has come after the Securities Appellate Tribunal had last year set aside the regulator's 2014-order, in which the two entities were fined Rs 2 crore each, and remanded the case to the adjudicating officer for passing fresh order on merits and in accordance with law.

Following alerts by the National Stock Exchange, the Securities and Exchange Board of India (Sebi) conducted an investigation in the matter of dealings of Yes Investments and Blue Peacock Securities for the period from July 1, 2009 to December 31, 2010.
According to fresh Sebi orders, Blue Peacock Securities on 25 days and Yes Investments on 20, between July 1, 2009 and December 31, 2010, placed huge buy orders away from market price and that majority of their sell transactions were executed while the previously placed buy orders were pending.

Both the entities executed majority of the buy transactions after cancelling previously placed huge buy orders which were away from market price.

Blue Peacock Securities had dealt in the shares of companies like NTPC, Wipro, Tata Motors, ICICI Bank, Karnataka Bank and Reliance Communications, while Yes Investments had traded in Balrampur Chini Mills, Educomp Solutions, Jindal Stainless, Uco Bank, among others.
"... buy orders placed by the noticee (Blue Peacock Securities) at below prevailing prices most of which remained unexecuted and were subsequently deleted, acted as BAIT to other market participants and such orders were placed with the sole motive of fraudulently inducing other lay investors to deal in those scrips," Sebi said.
While the buy orders were still pending in the market for execution, Blue Peacock Securities sold shares in the market (SWITCH) by placing sale orders close to prevailing prices, it added.

As per Sebi, Blue Peacock Securities was involved in BAIT and SWITCH activity "fraudulently" across various scrips and for several days.
With respect to Yes Investments, the regulator said it artificially enhanced the levels of demand by giving false impression in the market about demand and supply of the various scrips through manipulation of order book during the investigation period and thereby misled the investors.