Capital markets regulator Sebi on Thursday imposed penalties totalling Rs 30 lakh on six entities, including individuals, for indulging in non-genuine trades in illiquid stock options segment on the BSE. In six separate orders, the regulator has levied a fine of Rs 5 lakh each on Rajendra Kumar Agrawal, Rajendra Kumar Agrawal HUF, Lovely Vincom, Sudhir Kedia, Nimesh Harishkumar Vora HUF and Ankit Kumar Agrawala.
The Securities and Exchange Board of India (Sebi) observed large scale reversal of trades in stock options segment on the BSE. It noted that such large scale reversal of trades in stock options led to creation of artificial volume on the BSE. In view of the same, the regulator conducted an investigation into the trading activities of certain entities in illiquid stock options for the period from April 2014 to September 2015.
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Pursuant to the investigation, it was observed that over 2.91 lakh trades comprising substantial 81.38 per cent of all the trades executed in the stock options segment of the BSE during the probe period were non-genuine trades. The non-genuine trades resulted in creation of artificial volume to the tune of 826.21 crore units or 54.68 per cent of the total market volume in the stock options segment, as per Sebi.
It was also observed that these six entities were among the various entities which indulged in execution of reversal trades in the stock options segment. According to Sebi, trades by these entities were non-genuine in nature and created a misleading appearance of trading.
By indulging in such trades, they violated the provisions of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms. In a separate order, the regulator has levied a fine of Rs 2 lakh on Fast Track Finsec for violating SAST (Substantial Acquisition of Shares and Takeover) rules in the matter of Orient Tradelink.
"Noticee (Fast Track Finsec) failed to exercise diligence, care and professional judgment to ensure compliance with SEBI (SAST) Regulations," the regulator said in the order.