Markets regulator Sebi Thursday slapped a total penalty of Rs 2.81 crore on 18 entities for executing fraudulent trades in the illiquid stock option segment on the BSE.
N M Impex, Narayan Kumar Goyal HUF, Nextel Vinimay, Megha Associate, Chitragupta Sales & Services, Basic Clothing, Cellour Commercial, Vishal Ferro Alloys, R P Computer Forms are among others facing the action, as per separate orders of Sebi.
After observing a large-scale reversal of trades in the bourse's stock options segment, Sebi conducted a probe into the trading activity in illiquid stock options on the BSE from April 2014 to September 2015.
Following the probe, the regulator found that the entities bought and sold option contracts with the same counterparties, and also reversed trades on the same day at substantial price difference, making such trades non-genuine in nature.
The regulator noted that trades in securities market are executed with economic sense, and in normal course, attempt is made to earn profit. However, it is pertinent to note that the trading behaviour of the entities did not exhibit attempt to make profits, and in fact has shown contrary behaviour.
By indulging in such execution of non-genuine trades, the entities created a misleading impression of trading in stock option contracts in a fraudulent manner, thereby violating the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms, the regulator said.
Accordingly, Securities and Exchange Board of India (Sebi) imposed a fine of 1.15 crore on N M Impex, Rs 25 lakh each on Gajanan Enterprises and Nextel Vinimay, Rs 13.5 lakh on Vishal Ferro Alloys, Rs 10 lakh each on Pushkar Commercial and MB Investments, while for others the penalty levied was in the range of Rs 5 lakh to 6.5 lakh.