Sebi fines 6 entities for 'non-genuine trades' in illiquid stock options

Markets regulator Sebi Thursday imposed a total penalty of Rs 30 lakh on six entities for indulging in non-genuine transactions leading to creation of artificial trading volume in illiquid stock options segment of BSE.

The regulator has levied a fine of Rs 5 lakh each on six entities -- Pressweld Vessels, Prarambh Securities, Jai Ambey Metal Works, Jagdish Kumar Lalwani, Klapp Vyapaar and Kamaldhan Vyapaar.

It was alleged that the entities were involved in reversal trades which created false and misleading appearance of trading, generating artificial volumes in the stock options segment.

The orders came after the regulator announced adjudication proceedings against 567 entities involved in such trades in the first phase.

 

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

In similar worded orders passed on Thursday, Sebi observed that "noticee (the five entities) had indulged in execution of reversal of trades in with same entities on the same day."

The non-genuine and deceptive transactions of these entities are, prima-facie, covered under the definition of 'fraud', the orders said.

Consequently, the regulator has levied a penalty of Rs 5 lakh each on these entities.

By indulging in such activities, the entities violated provisions of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms, it said.

Separately, Sebi has slapped a total fine of Rs 20 lakh on four persons for the violation of PFUTP regulations by indulging in fraudulent trade in the shares of Kaveri Seed.

During the examination, Sebi found that the individuals along with the other connected entities had executed synchronised trades on the bourses which resulted in artificial volume and led to false appearance of trading in the scrip.

As per the orders, execution of synchronised trades amounts to fraudulent trade under PFUTP norms.

Accordingly, the regulator has imposed a fine of Rs 8 lakh on Sudha Sharma, Rs 5 lakh each on Krishna Bangad and Indira Devi Bangad and Rs 2 lakh on Abhishek Sharma.