India's stock market regulator, Securities and Exchange Board of India (Sebi), on Wednesday barred 22 entities, mostly brokers, from the securities market for allegedly pocketing illicit gains through manipulation of illiquid stock options.

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Sebi found that these entities were executing 'reversal trades' in the stock options segment.

According to the regulator, the entities generated through reversal trades a total loss of Rs 1,273 crore and total profit of Rs 1,303 crore.

These trades were done on Bombay Stock Exchange's stock options segment by its trading members.

However, Sebi has allowed all the 22 entities to continue to function as stock brokers for their existing clients in the cash segment.

Sebi has asked exchanges to conduct a "focused inspection" of the involved trading members and take corrective measures, if required and submit a report to Sebi on the matter within six months.

"These brokers have, prima facie, facilitated their clients to use and employ a pre-meditated manipulative device or contrivance while dealing in securities market and indulged in non-genuine and deceptive transaction," said Rajeev Kumar Agarwal, whole-time member, Sebi, in an order.

The entities, according to Sebi, manipulated deep in-the-money options and deep out-of-the-money options on individual stocks that were thinly traded. In fact, nearly 70-100% of the volumes in these counters were by the alleged manipulators.

The entities barred by the regulator include Giriraj Stock Broking, Odyssey Securities, Mousumi Deb Roy and Best Bull Stock Trading, among others.

The move is part of a series of action taken by the market regulator against entities manipulating the stock exchange platform for avoid taxes or making illegal gains.

Just a couple of days ago, Sebi had issued showcause notices to 15 entities for allegedly violating certain market norms by owning shares more than the prescribed threshold in Pune Stock Exchange (PSE). It was alleged that five persons associated with Prabodh Artha Wardhini Pvt Ltd (PAWPL) held 14.36% shares in Corporatisation and Demutualisation process of PSE, while eight entities linked with Vraj Finance were together holding 5.90% shares of the stock exchange.

On February 15, Sebi also barred stock broker Madhuvan Securities from taking fresh assignments for alleged manipulative trading in the shares of Adani Exports Ltd (AEL). In an order, Sebi said Madhuvan Securities facilitated its clients to execute structured and self trades which created volume in the scrip of AEL. The manipulative trades were executed by Madhuvan in NSE between January 1999 and March 1999 on behalf of Abhinav Investments and Prerak Capital Services. The regulator said that by indulging in such trades the entity violated certain provisions of the Sebi (Prohibition of Fraudulent and Unfair Trade Practices) Regulations.