Markets watchdog Sebi has levied a penalty of Rs 25 lakh on Indus Portfolio for carrying out reversal of trades in the illiquid stock options segment on the BSE.
Sebi conducted a probe between April 2014 and September 2015 after observing large-scale reversal of trades in the stock options segment on the bourse which led to the creation of artificial volume.
The firm had indulged in execution of reversal trades with the same counter parties during the same day at substantial price difference, Sebi noted in an order dated March 8.
Such trades are non-genuine as they are not executed in normal course of trading, lack basic trading rationale, and lead to creation of artificial volume.
"Trades of the noticee were non-genuine and have created false or misleading appearance of trading in terms of artificial volume in stock options and, therefore, manipulative and deceptive in nature," Sebi said.
Further, the regulator said that "the scheme, plan, device and artifice employed by the noticee in this case of executing reversal trades in illiquid stock options contracts at irrational, unrealistic and unreasonable prices, tantamount to fraud on the securities market."
By doing so, the firm has violated provisions of the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms. Accordingly, the Securities and Exchange Board of India (Sebi) imposed a fine of Rs 25 lakh on Indus Portfolio.
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