Sebi slaps Rs 55 lakh fine on 9 entities for fraudulent trades in stock options

Markets regulator Sebi has imposed a total fine of over Rs 55 lakh on nine entities for fraudulent and manipulative trading in illiquid stock options segment of BSE.

A fine of Rs 12.5 lakh was levied on BP Fintrade Private Ltd, Rs 7 lakh on Phool Chand Jain, Rs 6 lakh on Prognosis Securities.

Besides, a fine of Rs 5 lakh each was imposed on Benko Traders, Bhavsagar Vyapaar, Pasha Finance, PAT Financial Consultants, Evergreen Technologies and Maa Samleswari Industries, according to separate Sebi orders.

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

The regulator observed that the entities repeatedly bought and sold stock options and executed reversal trades with the same set of entities for same quantity within a short span of time with substantial price difference.

The rationale for such transactions entered by the entities are non genuine and irrational, the regulator said.

The entities by indulging in reversal trades which are manipulative, fraudulent and non-genuine in nature, created artificial volumes in the contracts, thereby violating Prohibition of Fraudulent and Unfair Trade Practices regulations, Sebi noted and hence slapped the penalty on the companies.

The orders are in line with 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. Since late October, the regulator has passed more than 60 orders against such entities.