Sebi slaps Rs 25-lakh fine on 5 entities

Markets regulator Sebi has slapped a total fine of Rs 25 lakh on five entities for executing fraudulent trades, leading to creation of artificial volume in the illiquid stock options segment on the BSE.

Those facing the penalties are Gladiator Vyapaar, Pratik Steelcasting, Jodhraj Finassist, Kamna Housing and Babubhai Ramanlal Patel, according to Sebi orders.

The Securities and Exchange Board of India (Sebi) conducted an investigation between April 2014 and September 2015 into the trading activities in illiquid stock options on the BSE after observing large-scale reversal of trades in the stock options segment.

During the probe, the regulator found that entities had executed several reversal trades with the same entities on the same day which were "non genuine in nature", thereby leading to false and misleading appearance of trading in illiquid stock options.

The non-genuine and deceptive transactions of the entities are covered under the definition of fraud and the dealings carried out by them were "fraudulent" under the PFUTP (Prohibition of Fraudulent and Unfair Trading Practices) norms, Sebi said in similar-worded but separate orders.

Accordingly, Sebi imposed a fine of Rs 5 lakh each on the five entities.

In April last year, Sebi announced to take action in a phased manner against 14,720 entities for fraudulent trade in the illiquid stock options segment and has passed several orders in the past against such entities.