SEBI imposes Rs 50 lakh fine on 10 institutions, here's why

In a move to crack down on illicit trading practices, the Securities and Exchange Board of India (SEBI) has imposed fines totaling Rs 50 lakh on ten entities. These institutions were found guilty of engaging in non-genuine trading within the illegal stock options segment on the Bombay Stock Exchange (BSE). SEBI has issued ten separate orders, each imposing a fine of five lakh rupees on the respective entities.

The entities facing penalties include Oroplus Marketing Private Limited, Baba Iron Industries, Atlantic Invest Advisory, Avinash V Mehta HUF, Navneet Agarwal & Sons HUF, Neeraj Gandhi HUF, Athwani Srichand, Aviral Gupta, Ayushi Agarwal, and Saloni Ruia.

SEBI's decision to impose penalties stems from its investigation into the trading activities of these entities, specifically focusing on the period between April 2014 and September 2015. The regulator discovered a significant number of reversal trades occurring within the illiquid stock options segment on the BSE. These trades generated artificial volumes on the exchange, leading to a false or misleading appearance of trading entities.

SEBI has stated in its orders that the entities violated the norms of Prohibition of Fraudulent and Unfair Trade Practices (PFUTP). Reversal trades, according to SEBI, are considered non-realistic in nature and contribute to deceptive trading practices. In response to these violations, SEBI has levied fines on the ten institutions.

In a separate development, SEBI has also canceled the certificate of registration for financial services of Allied Financial Services Private Limited. This cancellation comes as a result of the company's violation of regulatory norms. Allied Financial Services Private Limited was a registered member of the National Stock Exchange (NSE) and served as a Depository Participant for the National Securities Depository Limited (NSDL). It is worth noting that SEBI has previously imposed fines on other institutions, and periodic investigations are carried out to ensure compliance with regulations.