Sebi slaps Rs 5 lakh fines on Dharti Investment for fraudulent trade

Markets regulator Sebi Friday imposed a penalty of Rs 5 lakh on Dharti Investment and Holdings Ltd for indulging in non-genuine trades in illiquid stock options segment of the BSE.

The orders are in line with the Sebi's announcement in April 2018, wherein it had decided to take action in a phased manner against 14,720 entities for fraudulent trade in illiquid stock options segment and has already passed orders against more than 80 entities since October last year.

After observing large scale reversal of trades in the segment, the Sebi conducted an investigation into the trading activity of various entities between April 2014 to September 2015.

During the probe, the regulator observed that Dharti Investment was one among the various entities that executed several reversal trades, which were non-genuine in nature.

"Reversal trades executed by Noticee (Dharti Investment) do not follow the basic trading rationale, as they are not executed in normal course of trading in which trading inter-alia happens in anonymous and spontaneous environment with economic sense. Therefore such trades are considered non genuine," the Sebi said.

It is clear that by indulging in execution of non genuine trades, the entity created a misleading impression of trading in stock option contracts in a fraudulent manner, the regulator added.

By doing so, the entity violated PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) regulations thereby attracting monetary penalty, the Securities and Exchange Board of India (Sebi) said.