Sebi fines 2 entities Rs 10 lakh for fraudulent trade in BSE stock options

Market watchdog Sebi Wednesday imposed a total penalty of Rs 10 lakh on two companies for carrying out fraudulent trade in the illiquid stock options segment of BSE.

The regulator imposed a fine of Rs 5 lakh each on Teji Mandi Securities and Vikrant International Pvt Ltd, as per an order.

Securities and Exchange Board of India (Sebi), during an investigation between April 2014 to September 2015, found that 81.38 per cent of all the trades executed in stock options of the exchange were non-genuine and led to creation of artificial volume.

The two companies are among the entities that executed reversal trades by reversing their buy or sell positions in a contract with the same counter party during the same day, Sebi said.

The entities have violated provisions of Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) by indulging in such trade practices.

"The trades executed by the noticee were not genuine trades and being non-genuine, created an appearance of artificial trading volumes in respective contracts", Sebi noted.

The allegation of violation of PFUTP norms by the entities stand established, Sebi said in similarly worded, but two separate orders.

Accordingly, a penalty of Rs 5 lakh each has been levied on the two firms.

In a separate order, the regulator fined proprietor of Investor Gala Research Laboratories, Prachi Gupta, Rs 5 lakh for carrying out investment advisory activities without obtaining requisite registrations from Sebi.