Fraudulent trading: Sebi slaps fine of Rs 18 crore on 35 entities

Coming down heavily on fraudulent trade practices, markets regulator Sebi on Friday slapped a fine of over Rs 18 crore on 35 entities for indulging in circular trading and share price manipulation in the matter of Octant Interactive Technologies Ltd (OTIL), now known as Swarnajyothi Agrotech & Power.

"...it is a clear case of pump and dump wherein certain entities by trading among themselves had rigged the price, upon taking at greater height, dumped their shares and other entities slowly exited from the scrip by leaving other investors in severe losses," Sebi said while imposing fine on the entities.

The penalty imposed on entities ranges from Rs 25 lakh to Rs 3 crore.

The Securities and Exchange Board of India (Sebi) had conducted investigation into trading of OTIL's shares from January 2009 to September 2009.

Following the investigation, Sebi observed that the 35 entities were connected to each other and were hand in gloves with the brokers concerned in manipulating the shares of OTIL scrip and tried to circumvent detection of reversal/circular trades by issuing forged contract notes to give an impression that the shares were bought on stock exchange through third parties.

"The Noticees had completely misused the stock exchange platform to manipulate the price of a stock which was not backed by any fundamentals and they traded among themselves to create an artificial volume and entice other investors to start buying this scrip," Sebi said.

The manipulative trading by entities violated PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) regulations, Sebi said.

Among the 35 entities, Giriraj Kishore Agarwal, Tanu Giriraj Kishore Agarwal were fined Rs 3 crore and Rs 2 crore respectively.

Keystone Stock Financial Ltd, Indra Pratap Giriraj Singh, Jitendra Chandrabhan Singh, Alliance intermediaries and Network, VRP Financial Servies Pvt Ltd were slapped a fine of Rs 1 crore each.

The remaining entities were fined between Rs 25 lakh to Rs 55 lakh.