Sebi fines 4 entities Rs 22 lakh for fraudulent trade in BSE stock options

Markets regulator Sebi has slapped a total fine of Rs 22 lakh on four entities involved in fraudulent trade practices in the illiquid stock options segment on BSE.

In separate orders passed on Wednesday, Sebi levied a fine of Rs 5 lakh each on Sanjay Kumar Mahipal, Ram Avtar Mahipal, Vora Financial Services and Rs 7 lakh on Kishan Gopal Mohta.

The regulator conducted a probe between April 2014 and September 2015 and 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.

These entities were among the various others that were indulged in execution of reversal trades in the stock options segment as they reversed their buy or sell positions in a contract with the same counterparty during the same day.

Such trades are in violation of the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) regulations, Sebi noted.

"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 said in separate but similarly worded orders.

In April 2018, the Securities and Exchange Board of India (Sebi) had decided to take action in a phased manner against 14,720 entities for fraudulent trade in the illiquid stock options segment.