Sebi levies Rs 1.76 cr fine on 25 entities for fraudulent trading in Kuber Udyog scrip

Markets regulator Sebi on Friday imposed a total penalty of Rs 1.76 crore on 25 individuals for carrying out fraudulent trading in the scrip of Kuber Udyog Ltd.

The order follows an investigation conducted by Sebi in the shares of the firm between March 2016 and April 2017.

Sebi found that the individuals had entered into reversal trades amongst themselves which did not result in change in beneficial ownership, and created misleading appearance of trading in the scrip.

"This is a case wherein a group of 25 noticees acting in league orchestrated a fraudulent device and artifice to create artificial volume while trading amongst themselves in reversal of trades," Sebi said.

Reversal trades are non-genuine trades as they involve an entity reversing its buy or sell positions in a contract with subsequent sell or buy positions with the same counterparty and thus, artificial volume is created, it added.

Out of the 25 individuals, 19 entities also indulged in manipulation of price of the scrip, Sebi noted.

By doing so, the entities violated Prohibition of Fraudulent and Unfair Trade Practices norms.

"The impugned reversal trades were carried out by the noticees with a predetermined arrangement and with prior meeting of minds amongst trading parties. It is also to be kept in mind that such heinous acts...do not deserve leniency, and should be dealt sternly and be suitably penalized," Sebi said.

Consequently, it levied fine on the 25 entities in the range of Rs 5-16 lakh each.