Sebi slaps Rs 40.5 lakh fine on 7 firms for fraudulent trading

Markets regulator Sebi on Monday imposed a total fine of Rs 40.5 lakh on seven companies for indulging in fraudulent trading in the illiquid stock options segment on the BSE.

Of the total fine levied on the firms, Rs 10.5 lakh was levied on Green Venture Securities Management Pvt Ltd while Morgan Financial Services, Niranjan Housing, Navrang Tradelinks, Niranjan Metallic, Nishu Leasing and Finance and Midpoint Tradelink faced a fine of Rs 5 lakh each.

"The reversal trades executed by the Noticee were non-genuine in nature and created an impression of genuine trading volumes in respective contracts," Sebi said in similarly worded separate orders.

The orders follow an investigation conducted by the Securities Exchange Board of India (Sebi) in the stock options segment of the BSE from April 2014 to September 2015 after it observed large scale reversal of trades that led to creation of artificial volume.

The probe found that the firms were among those entities which indulged in execution of non-genuine trades by executing reversal trades in the stock options segment.

Reversal trades are those trades in which an entity reverses its buy or sell positions in a contract with subsequent sell or buy position with the same counterparty during the same day.

Sebi noted that the firms violated Prohibition of Fraudulent and Unfair Trade Practices norms and thus levied fine on the entities.