Sebi slaps Rs 43.5-lakh fine on 5 entities for non-genuine trades in BSE stock options

Markets regulator Sebi Tuesday imposed a total fine of Rs 43.5 lakh on five entities involved in reversal of trades in the illiquid stock options segment on the BSE.

Sebi conducted an investigation between April 2014 and September 2015 and found that 81.38 per cent of all the trades executed in stock options of the exchange were non-genuine and led to the creation of artificial volume.

The five entities are among those that executed reversal of trades by reversing their buy or sell positions in a contract with the same counter party during the same day, Sebi noted.

"The trading behaviour of the noticee confirms that such trades were not normal and wide variation in prices of the trades in the same contract in a short time without any basis for such wide variation, all indicate that the trades executed by the noticee were not genuine trades," Sebi said in similarly worded separate orders.

The trades being non-genuine, created an appearance of artificial trading volumes in respective contracts, it added.

The entities have violated provisions of the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) regulations by indulging in such trade practices.

Consequently, the Securities and Exchange Board of India (Sebi) has levied a fine of Rs 17 lakh on Vimal Vadilal Shah, Rs 11.5 lakh on Bhikshu Portfolio and Rs 5 lakh each on RPC Commercial, Bhaijee Portfolio and Thakkar Kanaiyalal Shivram Bhai.

The orders are in accordance with Sebi'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.