Sebi fines 2 entities Rs 18 lakh for fraudulent trades

Markets regulator Sebi Tuesday imposed a total fine of Rs 18 lakh on two entities for executing reversal trades, leading to creation of artificial volume in illiquid stock options at BSE.

The entities facing penalties are Orbit Financial Capital and one Vijay Singh Mundhra, according to two separate Sebi orders.

Sebi had conducted an investigation into the trading activities of certain entities in stock options segment of BSE from April 2014 to September 2014.

After the probe, the regulator found that the entities executed several reversal trades on same day with same counter party, which were not genuine in nature.

The regulator said the trades executed by the entities were not genuine and created an appearance of artificial trading volumes in the stock options segment and thereby violated PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, which makes them liable for monetary penalty.

Accordingly, the Securities and Exchange Board of India (Sebi) fined Orbit Financial Rs 8 lakh while Mundhra was fined Rs 10 lakh.

In a separate order, Sebi fined one Soni Sanjay Jethalal Rs 15 lakh for failing to comply with summons issued by it.

Through summons, Sebi had sought information regarding circulation of bulk SMSes by Jethalal containing unsolicited advice recommending purchase of Timbhor Home Ltd's shares.

"Noticee ( Jethalal) had repeatedly failed to comply/honor summons/advices issued by the investigation authority and has completely disregarded and disobeyed the same," Sebi said and hence imposed a fine on him.

In an another orders, the regulator has levied a fine of Rs 6 lakh on Smita Agarwal and Rs 5 lakh on Anuj Kumar Agarwal.

The two individuals, along with a group of several other entities, entered into reversal of trades -- shares purchased or sold on market were transferred through off market within the next two working days -- that created artificial volume in the share of Pressman Advertising, the regulator said.

The actions of these two individuals are in violation of PFTUP (Prohibition of Fraudulent and Unfair Trade Practices) norms, it added.