Sebi fines R S Ispat Rs 25 lakh for fraudulent trade in illiquid stock options

Sebi Tuesday slapped a penalty of Rs 25 lakh on Kolkata-based R S Ispat for indulging in non-genuine trade which created a false appearance of trading in illiquid stock options segment of BSE.

In April, Sebi had announced to take action in a phased manner against 14,720 entities for 'non-genuine trades' in illiquid stock option segment.

The markets regulator said adjudication proceedings have been initiated against 567 entities involved in such trades in the first phase.

In an order, Sebi fined the firm for violating PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) Regulations.

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

The probe found that R S Ispat was one of the various entities indulged in execution of non-genuine trades in stock options during the examination period.

The company "by indulging in execution of reversal trades in stock options with same entities on the same day, had created artificial volume leading to false and misleading appearance of trading...therefore violating PFUTP regulations. Accordingly noticee (R S Ispat) is liable for monetary penalty," the regulator said and imposed fine on it.