Sebi slaps Rs 25 lakh fine on individual for circular trades

Market watchdog Sebi today slapped a fine of Rs 25 lakh on one Anil Dave for allegedly indulging in synchronised trading activities.
Also, Dave is charged with allowing Grishma Securities P Ltd (GSPL) to use his account for diverting funds to other front entities of the company.
The Securities and Exchange Board of India (Sebi), in its order has imposed "a penalty of Rs 25 lakh ...On the noticee viz. Anil Dave for violation of...PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) Regulations."
Synchronised or circular trading refers to a practice where the seller and buyer have an understanding between them on trading of specific shares.

A Sebi probe found that Dave was indulged in synchronised trades with Vimal Patel, another client of GSPL. The investigation also found that Dave had permitted GSPL to use his account as a conduit for diverting funds to other front entities of GSPL and thereby violated provisions of PFUTP regulations.
The regulator conducted investigation in the trading of Dave as a client of GSPL during November 12-December 28, 2011.

Sebi, through an ad interim order in December 2011, had prohibited GSPL in the matter of Tijaria Polypipes Ltd (TPL) from buying, selling or dealing in securities in any manner whatsoever till further directions.

In the current case, Sebi said that the transactions between Dave and other clients took place in November-December 2011 and a few days before this i.E in October 2011.
"The broker GSPL and the entities like Vimal Patel, Mihir Ghelani--to whom the money received in and transferred from the account of the Dave finally landed-- were involved in a fraudulent activity in the matter of investigation in the IPO of TPL where a similar modus operandi of layered fund transactions was used," Sebi said.