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Capital markets regulator Sebi on Thursday slapped penalties totalling ₹50 lakh on ten entities for indulging in non-genuine trades in illiquid stock options segment on BSE.
The Securities and Exchange Board of India (Sebi) conducted an investigation into the trading activity in illiquid stock options from April 2014 to September 2015 after observing large-scale reversal of trades in the stock options segment on BSE.
It was observed that during the investigation period, a total of 2,91,744 trades comprising 81.40% of all the trades executed in the BSE stock options segment were trades which involved reversal of buy and sell positions by the clients and counterparties in a contract.
Sebi noted that the related parties whose reversal trades involved squaring off open positions with a significant price difference without any basis for such change in the contract price.
Such trades were observed to be non-genuine in nature creating false or misleading appearance of trading in terms of artificial volumes in stock options and therefore were alleged to be manipulative and deceptive in nature, Sebi said.
In ten separate orders, the regulator imposed a fine of ₹5 lakh each on Sarita Agrawal, Sanjay Garg, Ajay Gupta, Sanjay Kumar Poddar HUF, Padma Singhal, Pushpa Devi Soni, Priti Jain, Shubham Bansal, Sanjay Godha and Milestone Tie Up Pvt Ltd.
The orders came after Sebi observed large-scale reversal trades in the stock options segment on BSE, leading to creation of artificial volumes in the segment.
By indulging in such trades in stock options, they flouted the provisions of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) regulations.
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