Sebi imposes Rs 32.5 lakh fine on four entities for fraudulent trade

Regulator Sebi slapped a total fine of Rs 32.5 lakh on four entities for fraudulent and manipulative trading in illiquid stock options segment on the BSE.

Probing the period from April 2014 to September 2015, Sebi found that 81.38 per cent of the trades executed in the bourse's stock options segment were non-genuine and led to the creation of artificial volume.

The investigation revealed that the four entities were among those that executed reversal of trades by reversing their buy or sell positions in a contract with the same counter party during the same day.

The entities placed buy and sell orders in a synchronised manner and reversed the trades within a short time with wide variation in prices of the trades.

The non-genuine and deceptive trades are covered under the definition of "fraud", Sebi said.

By indulging in such trades, the entities have violated provisions of the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) norms, Sebi noted in similarly worded separate orders.

Accordingly, a fine of Rs 17.5 lakh has been imposed on Brahm (Alloys) Ltd and Rs 5 lakh each on Kasturbhai Mayabhai Pvt Ltd, Jagdish Singh and Crawford Marketing Pvt Ltd.

The orders are in line with the Securities and Exchange Board of India's announcement in April 2018 on taking action in a phased manner against 14,720 entities for fraudulent trade in the illiquid stock options segment.