SEBI imposes penalty of Rs 17 lakh on 3 entities for fraudulent trading

Markets regulator Sebi Tuesday imposed a total penalty of over Rs 17 lakh on three entities for indulging in fraudulent trading in the illiquid stock options segment on the BSE.

The Securities and Exchange Board of India (Sebi) observed a large-scale reversal of trades in the stock options segment of the stock exchange and conducted an investigation between April 2014 and September 2015.

Pursuant to the investigation, it was found that 81.38 per cent of all the trades executed in the segment were non-genuine in nature.

The entities executed reversal of trades by reversing their buy or sell positions in a contract with the same counter-party during the same day, Sebi said.

"Noticee, by engaging in such non-genuine transactions, created a misleading impression of trading in respective contracts while dealing in stock options contracts in a fraudulent manner," Sebi said in similarly worded three separate orders.

Noticees are Shri Sarvasarai Balaji Steels, Sri Shyam Baba Ferro Alloys and Kailash Darshan Housing Development Gujarat Pvt Ltd.

The entities have violated provisions of the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) regulations by indulging in such trade practices.

Thus, a fine of Rs 7.6 lakh has been levied on Shri Sarvasarai Balaji Steels, while others have been fined Rs 5 lakh each.

In a separate order, the regulator imposed a penalty of Rs 3 lakh on Anubhav footwears Pvt Ltd for failing to furnish the information sought by Sebi in a matter related to Man Industries Ltd.

By failing to provide the required information, the firm hampered the investigations, thereby making it liable for imposition of monetary penalty, Sebi said.