Sebi fines 2 entities for non-genuine trades

Markets regulator Sebi has imposed a total penalty of Rs 10 lakh on 2 entities for engaging in non-genuine transactions, which created artificial volume in the illiquid stock options on the BSE.

The entities fined in this case are Ganga Nagar Commodity and Rajesh Bhagchandji Kochar.

The Securities and Exchange Board of India (Sebi) conducted an investigation into the trading activities of certain entities in illiquid stock options at BSE from April 2014 to September 2015 after observing large scale reversal of trades.

"The non-genuine and deceptive transactions of these entities are, prima-facie, covered under the definition of 'fraud' and the dealings of the Noticee (entities)... were "fraudulent," Sebi noted in similar worded orders on Thursday.

By executing such trades, the entities have violated the provisions of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) Regulations.

Accordingly, the regulator has imposed a penalty of Rs 5 lakh each on the entities through separate orders.

Separately, Sebi levied a fine totalling 7.5 lakh on three firms after they failed to comply with its direction of conducting the audit of records and systems of Sharepro Services.

The three firms, MH Mills & Industries, Crest Animation Studios and Capman Fiancials are clients of registrar and transfer agent (RTA) Sharepro Services.

"I find that the Noticee (firms) had failed to comply with the directions in the Sebi order dated March 22, 2016 by not submitting the audit report in respect of the records and systems of Sharepro and by not shifting the operation related to RTA from Sharepro," Sebi said in three separate orders dated Dec 20, 2018.

The regulator in March 2016 had directed the firms to conduct a thorough audit of Sharepro regarding dividends paid and transfer of securities and also asked the companies to switch over its activities related to a RTA either in-house or through another RTA registered with the markets regulator.

Therefore, MH Mills & Industries and Crest Animation Studios have been fined Rs 3 lakh each, while Capman Financials has been fined Rs 1.5 lakh.