Sebi imposes Rs 21 lakh fine in fraud trade case

Capital markets regulator Sebi today slapped a fine of Rs 21 lakh on two individuals for indulging in fraudulent trading in the shares of Vamshi Rubber.
The Securities and Exchange Board of India (Sebi) has imposed a fine of Rs 16 lakh and Rs 5 lakh on Nagad Sarwar and Altaf Ahmed G Nagad, respectively, "which will be commensurate with the violations committed by the noticees".
A Sebi probe found that both the entities indulged in self trades while trading in the shares of Vamshi Rubber and created artificial volume in the scrip, leading to false and misleading appearance of trading.

Self trades are those kind of trades where the seller and buyer in a trade or contract remain the same person and in such types of transactions no actual beneficial ownership is changed.
According to the regulator, Nagad had executed 187 self trades involving 19,727 shares in 47 days, while Altaf executed 11 self trades involving 1,437 shares in three days.
By indulging in such activities, both entities have violated the provisions of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) regulations.

As per the regulator, such fictitious trade affects the integrity of securities market, even though such trades may be minuscule in quantity.

In a separate order, Sebi has imposed a penalty of Rs 4 lakh on one individual, Arvind Kumar Saraf, for making delayed disclosures regarding the acquisitions of Arcotech shares.
Saraf, along with the PACs, had acquired shares of Arcotech on two occasions. He had picked up 1 lakh shares each or 0.5 per cent stake on February 5, 2010 and February 8, 2010.
Saraf, being the promoter of Arcotech, was required to make necessary disclosures under the PIT (Prohibition of Insider Trading) Regulations. However, he made the disclosure with a delay on both the occasions.
In the same matter, the watchdog has disposed of the case against 12 other entities.