Sebi fines 4 entities for fraudulent trade in stock options

Markets regulator Sebi has imposed a total penalty of over Rs 20 lakh on four firms for indulging in fraudulent trades, which created artificial volume in the illiquid stock options segment on the BSE.

The regulator has levied a fine of Rs 5 lakh each on Avinash Infra Projects, Bina Udyog, Balajee Structurals and Rs 5.5 lakh on Blackcherry Commosale.

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

The probe found that these firms reversed their buy or sell positions with the same counter party during the same day and thus defied the criteria to be called as normal trading practice, the regulator noted in similarly worded separate orders.

By indulging in such trades, these entities violated provisions of the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) regulations, it added.

Accordingly, these firms are fined for non-genuine trade practices.

In April, Sebi announced to take action in a phased manner against 14,720 entities for fraudulent trade in illiquid stock options segment and passed several orders in past few weeks against such entities.