Well Pack Papers case: Sebi slaps Rs 3 cr fine on 56 entities

Sebi today imposed a total penalty of Rs 3.03 crore on 56 entities, including stock brokerage firm Arcadia Shares & Stock Brokers, for fraudulent trading in shares of Well Pack Papers & Containers Limited (WWPCL).
The case relates to probe conducted by Securities and Exchange Board of India (Sebi) into alleged irregularities in the trading in WPPCL shares during November 28, 2008 to March 12, 2010 and March 15, 2010 to June 30, 2010.
Sebi found that 55 entities by trading amongst themselves "had indulged in synchronised trading on numerous occasions, resulting in no change of beneficial ownership thereby, creating artificial volume in the scrip of WPPCL which gave a false and misleading appearance of trading in the said scrip".

In a ruling today, it also said that "Arcadia by executing fictitious trades, in the nature of self and synchronised trades, on behalf of its clients has violated provisions...Of Broker Regulations".
Accordingly, Sebi has slapped a penalty of Rs 3.03 crore on the 56 entities including Arcadia.
It has imposed a penalty of Rs 2 lakh on the stock broker and fines in the ranges of Rs 2-6 lakh on the others.

Sebi observed that the entities connected to each other by one way or the other, had dealt in the scrip of WPPCL through multiple brokers in a fraudulent and manipulative manner, without real change in ownership of shares, by indulging in number of synchronised trades.

They had heavily traded amongst themselves thereby, creating artificial volumes and price rise in the scrip.
The entities were also observed to have done off-market transactions among themselves for the purpose of meeting the settlement obligations of one another.
Among others, Sebi in the order today said "this kind of activity seriously affects the normal price discovery mechanism on the stock exchange platform".
"People who indulge in manipulative, fraudulent and deceptive transactions should be suitably penalised for the said acts of omissions and commission," it added.