Sebi slaps Rs 12.6-lakh fine on 2 entities for fraudulent trading in stock options

Capital market regulator Sebi on Friday imposed a total penalty of Rs 12.6 lakh on two entities for indulging in fraudulent trading in illiquid stock options segment on the BSE.

The regulator levied a fine of Rs 7.6 lakh on Dev Commodity Brokers Pvt Ltd and Rs 5 lakh on Deepak Natvarlal Pankhiyani HUF.

After observing large-scale reversal of trades in the illiquid stock options segment of the BSE, the Securities and Exchange Board of India (Sebi) conducted a probe in the segment between April 2014 and September 2015.

The investigation showed that over 81 per cent of all trades executed in the segment involved reversal of buy and sell positions by clients and counterparties which resulted into generation of artificial volumes.

The trades carried out by these entities were non-genuine in nature and created a misleading appearance of trading in the illiquid stock options contracts, where there was negligible participation by the public, the regulator said in two separate orders on Friday.

By indulging in such activities, the entities have violated the provisions of the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms, it added.

In two separate orders, the regulator also levied a penalty of Rs 4 lakh each on Wasankar Investment and Wasankar Wealth Management Ltd for providing incorrect information relating to its bank accounts to Sebi.

By doing so, the entities violated Stock Broker and Sub Broker Regulations and the code of conduct specified for stock brokers under Sebi's norms, the regulator said.