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Sebi fines 8 firms for fraudulent trading in BSE's illiquid stock options

After observing large-scale reversal of trades in the illiquid stock options segment of the BSE, the Sebi conducted a probe in the segment between April 2014 and September 2015

Press Trust of India  |  New Delhi 

Sebi

regulator has imposed a penalty totalling Rs 40 lakh on eight entities for indulging in fraudulent trading in illiquid stock options on the BSE.

The regulator has levied a fine of Rs 5 lakh each on eight entities -- Mudrika Goods, N R Ispat and Power, North Eastern Publishing and Advertising Company, Mainstream Dealers, Murari Lal Saraogi, Mamta Jain, Mukut Behari Agarwal and Murugan Karthik Meiyappan.

After observing large-scale reversal of trades in the illiquid stock options segment of the BSE, the Securities and Exchange Board of India (Sebi) conducted a probe in the segment between April 2014 and September 2015.

The investigation showed that over 81 per cent of all the trades executed in the segment involved reversal of buy and sell positions by the clients and counter-parties in a contract which resulted into generation of artificial volumes and eight entities, among others, were involved in such transactions.

The trades carried out by these entities were non-genuine in nature and created a misleading appearance of trading in the illiquid stock options contracts, where there was negligible participation by the public, the regulator said in eight separate orders on Friday.

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

First Published: Mon, February 03 2020. 18:30 IST
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