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Sebi levies Rs 36 lakh fine on 7 entities for fraudulent trade practices

Press Trust of India  |  New Delhi 

Markets regulator Sebi imposed a total penalty of Rs 36 lakh on seven entities for indulging in manipulative and fraudulent trade practices in illiquid stock options of BSE.

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.

During the probe, Sebi observed that a total of 2.91 lakh trades, comprising more than 80 per cent of all the trades executed in stock options of the exchange, were non-genuine and the firms were among the entities that had indulged in executing non-genuine trades.

The manner of placing buy and sell orders in a synchronised manner within few minutes of each other and reversal of trades in a short time with wide price variation without any basis for such variation indicate that trades executed by the entities were non-genuine and created artificial trading volumes, Sebi noted.

In similarly worded separate orders, Sebi said "act of noticee was deceitful and misleading to other unsuspecting investors, and amounts to manipulation of volume in these contracts.... noticee created a misleading impression of trading in said stock option contracts in a fraudulent manner."

By executing such trades, the entities violated PFUTP (Prohibition of Fraudulent and Unfair Trading Practices) regulations, Sebi said in orders on Tuesday.

Among the seven entities, Varun Vinimay Pvt Ltd, Shri Balaji Trade, Leela Network Pvt Ltd, Maa Amba Towers Ltd, Bermaco Energy System and Calendula Teledata were fined Rs 5 lakh each while Maa Ambe Warehousing Pvt Ltd was fined Rs 6 lakh, according to Sebi's separate orders.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, May 01 2019. 18:10 IST