Sebi slaps Rs 20 lakh fine on 4 individuals for non-genuine trades

Sebi on Tuesday slapped fines totalling Rs 20 lakh on four individuals for indulging in non-genuine trades in the illiquid stock options segment on BSE.

In four separate orders, the regulator imposed a fine of Rs 5 lakh each on Manish Kumar Kanodia, Seeta Devi Agrawal, Seema Charul Maisheri and Chandrani Dutta.

The Securities and Exchange Board of India (Sebi) had observed large-scale reversal trades in the illiquid stock options segment on BSE, leading to artificial volumes on the exchange.

The regulator conducted an investigation into the trading activities of certain entities engaged in the segment from April 2014 to September 2015.

The four individuals that have been fined on Tuesday were among those who indulged in the execution of reversal trades.

Reversal trades are alleged to be non-genuine in nature as they are executed in the normal course of trading, which leads to a false or misleading appearance of trading in terms of generating artificial volumes, the regulator said.

By indulging in these acts, Kanodia, Agrawal, Maisheri and Dutta violated the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms.

In a separate order, the regulator suspends the registration of Indo Thai Commodities for its involvement in illegal paired contracts on the now defunct National Spot Exchange Ltd (NSEL).

By providing access for taking exposure to paired contracts, the broking firm's clients were exposed to the risk involved in trading in a product that did not have regulatory approval, Sebi said in an order.

Further, the regulator said that trading activities of the noticee (Indo Thai Commodities) in paired contracts for their clients on the NSEL platform have jeopardised its reputation as also Sebi's belief in its character, competence and integrity which compelled the regulator to file the criminal complaint against Indo Thai Commodities and also against several other brokers, it added.

Accordingly, Sebi has suspended the registration of Indo Thai Commodities for a period of three months from the date of the order or till such time an order is passed by a court of competent jurisdiction, discharging or acquitting the noticee, whichever is later.