Sebi fines Raghav Commodities Rs 25 lakh for fraudulent trade

Markets regulator Sebi has slapped a penalty of Rs 25 lakh on Raghav Commodities for executing fraudulent trades, which created artificial volumes in the illiquid stock options segment on the BSE.

Sebi conducted an investigation into the trading activities of certain entities from April 2014 to September 2015 after observing large-scale reversal of trades in the BSE's stock options segment.

The probe found that more than 81 per cent of all the trades executed were the ones, which involved reversal of buy and sell positions by the clients and counter-parties in a contract.

Raghav Commodities was among the various entities involved in non-genuine trades as it had indulged in execution of reversal of trades in stock options with same entities on the same day, the regulator noted.

"The scheme, plan, device and artifice employed by the Noticee .... executing reversal trades in illiquid stock options contracts at irrational, unrealistic and unreasonable prices, tantamount to fraud on the securities market in as much as it involves non-genuine/ manipulative transactions in securities and misuse of the securities market," Sebi said in an order on Monday.

By doing so, the firm has violated the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) Regulations.

Accordingly, the Securities and Exchange Board of India (Sebi) has levied a fine of Rs 25 lakh on Raghav Commodities.

In April, the regulator 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.