Sebi slaps penalty on broker, client in BGIL case

Sebi today imposed a penalty of Rs 5 lakh each on stock broker Adroit Financial Services and its client AKG Securities and Consultancy in a case relating to fraudulent trading activities in shares of Bharatiya Global Infomedia Ltd (BGIL).
It also asked them to take steps to avoid fictitious trades in the capital markets.
The alleged activities occured on BGIL's listing day on July 28, 2011.
A probe conducted by securities market regulator found that Adroit Financial had executed self trades in the shares of BGIL on the first day of trade, for its client, AKG Securities, that resulted in creation of artificial volume in the scrip of the company.

Accordingly, in an order today, Securities and Exchange Board of India (Sebi) directed Adroit Financial Services to "review its own systems and take appropriate steps to avoid self-trades and other categories of trades which are prohibited under the Sebi Regulations/guidelines".
"AKG Securities and Consultancy shall also take steps to ensure that its trades do not result in self-trades," the market regulator added.

Further, Sebi has imposed a "penalty of Rs 5 lakh" each on Adroit Financial AKG Securities for violation committed by them with respect to trading in shares of BGIL.
The order passed by Sebi whole time member Prashant Saran comes after an examination of the ruling given by Sebi adjudication officer in the matter earlier last year.

At the time, the Sebi adjudication officer had disposed of the case against both the entities.
Following amendment to the Sebi Act, the market regulator has been given powers to review its own orders.
"This matching by way of self trades is not acceptable and the leniency shown by the (Sebi) adjudication officer would be detrimental to market discipline," Saran said in the order today.
"Further, showing any leniency would convey a wrong message that the entities who adopt strategies in trading, as submitted by Adroit and AKG in this case, would not be responsible for the self trades that may result from their 'strategy'," he added.