Sebi fines Rs 15 lakh on three entities for fraudulent trading in BSE's illiquid stock options

Markets regulator Sebi has imposed a penalty totalling Rs 15 lakh on three entities for indulging in fraudulent trading in illiquid stock options on the BSE.

The regulator has levied a fine of Rs 5 lakh each on Baba Commercial & Finvest Pvt Ltd, Dewdrops Mercantiles Pvt Ltd and Clan Laboratories Pvt Ltd.

After observing large-scale reversal of trades in the illiquid stock options segment of the BSE, the Securities and Exchange Board of India (Sebi) conducted a probe in the segment between April 2014 and September 2015.

The investigation showed that over 81 per cent of all the trades executed in the segment involved reversal of buy and sale positions by the clients and counter-parties in a contract that resulted into generation of artificial volumes.

The trades carried out by these entities were non-genuine in nature and created a misleading appearance of trading in the illiquid stock options contracts, where there was negligible participation by the public, the regulator said.

By indulging in such activities, the entities have violated the provision of the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms, it added.