Capital markets regulator SEBI on Thursday imposed a penalty totalling Rs 25 lakh on five individuals for indulging in fraudulent trading in the shares of Cupid Trades and Finance Ltd.
A penalty of Rs 5 lakh each has been levied on Devang Mukandray Patel, Sonal Devang Patel, Manishaben Maheshkumar Patel, Rajesh Kumar and Kishor Sharma.
The regulator had conducted a probe into the trading activities of certain entities in the scrip of Cupid Trades & Finance for the period of January 2010 to December 2014.
During investigation, it was found that the above entities contributed both individually and collectively to price fall in the scrip by repeatedly placing buy orders in miniscule quantity only to match the pending sell orders at a price lower than last trade price (LTP), thereby, executing the first trades of the day so as to create a fresh LTP at lower price compared to the previous LTP.
It was further revealed from sequencing of the trading pattern adopted in these trades that these persons placed their buy orders not on business prudence, but with a fraudulent intent of pulling down the price of the scrip, SEBI said in an order.
Also, they were not acting as genuine buyers and had no bona fide intention to buy the shares of Cupid and instead, the orders placed by them were laden with all the ingredients to be held as unfair, misleading and thereby fraudulent, SEBI said.
The entities deliberately manipulated the price of the scrip and created a misleading appearance of trading in the scrip to induce innocent investors in the securities market, the order said.
By doing so, they violated the provisions of PFUTP (Fraudulent and Unfair Trade Practices) Regulations .
In a separate order, the regulator levied a fine of Rs 25 lakh on promoter group entities of Knitworth Exports Ltd (KEL) for failing to comply with Takeover norms.
According to SEBI, the promoters were 'persons acting in concert' for acquiring shares in KEL and had the obligation of making an open offer, but they failed to do so.
They, thereby, failed to comply with the provisions of SAST (Substantial Acquisition of Shares and Takeovers Regulations).
Accordingly, the regulator slapped a fine of Rs 25 lakh to be paid jointly and severally.
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