Capital markets regulator Sebi imposed a total fine of Rs 28 lakh on five entities for fraudulent and manipulative trading in illiquid stock options segment on the BSE.
After observing a large-scale reversal of trades in the illiquid stock options segment, Sebi conducted a probe from April 2014 to September 2015 and found that 81.38 per cent of the trades executed in stock options were non-genuine, which led to the creation of artificial volume.
The regulator noted that the five entities were among those that executed reversal of trades.
The entities placed buy and sell orders in a synchronised manner and reversed the trades within a short time with wide variation in prices of the trades.
The reversal trades executed by the entities are non-genuine trades as they are not executed in the normal course of trading, lack basic trading rationale, and lead to false or misleading appearance of trading in terms of generation of artificial volumes, the regulator said.
The fraudulent trades conducted by the entities are in violation of provisions of the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) norms, Sebi noted in five similarly worded separate orders.
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Consequently, a fine of Rs 6 lakh each has been levied on Ansuya M Trivedi, Arc Finance Ltd and Acira Consultancy, while Anitha Prabhu and Radha Smelters Ltd have been fined Rs 5 lakh each.
The orders are in accordance with the Securities and Exchange Board of India's announcement in April 2018 to take action in a phased manner against 14,720 entities for fraudulent trade in the illiquid stock options segment.