Sebi imposes Rs 30 lakh fine on four entities in Veritas case

Market watchdog Sebi today slapped a total fine of Rs 30 lakh on four entities, including Religare Securities, for allegedly indulging in fraudulent dealing in the shares of Veritas (India) Ltd.
The Securities and Exchange Board of India (Sebi), in two separate orders, has levied a fine of Rs 10 lakh each on Religare Securities and one Jai Kishan Lakhmani and Rs 5 lakh each on one Vasantlal Mohanlal Vora and Arcadia Shares & Stock Brokers.
It was alleged, in the show cause notice, that Lakhmani had traded in the scrip of Veritas and indulged in fictitious trades which were self trades in nature through its broker, Religare Securities.

While trading in the shares of Veritas, Lakhmani had placed the orders at prices much higher than the LTP (last trading price) which had resulted in increase in the price of the scrip.
The regulator in its today's order said "the noticee No.1 (Lakhmani) in all the nine trades had established new LTP and also, had entered into self trades for nine shares while trading through noticee No. 2 (Religare Securities)."
Sebi has not found any merits in the submissions of Religare Securities that the surveillance system did not generate alerts and therefore, the fictitious trading on the part of Lakhmani was not noticed by the broker.

"I find that the Noticee No. 2 (Religare Securities) was under obligation to perform its duties with due care while carrying out its role as a registered stock broker," Sebi Adjudicating Officer D Sura Reddy said.

Sebi said Lakhmani by indulging in the self trades had made illegal gains of Rs 77,501.
The regulator further said that Vora, while trading in the scrip of Veritas, which was an illiquid scrip, had "indulged in certain self trades (six occasions) for 12 shares which are fictitious in nature and thereby did participated in manipulative and fraudulent trading practices."
Out of the six instances of self trades, in two instances, Vora had traded through Arcadia Shares & Stock Brokers, Sebi said.