Markets regulator Sebi has levied a total penalty of over Rs 55 lakh on six entities for indulging in non-genuine and manipulative trades in the illiquid stock options segment of the BSE.
The six entities "by engaging in such non-genuine transactions, created a misleading impression of trading in respective contracts while dealing in stock options contracts in a fraudulent manner," the regulator said in separate, but similarly worded orders.
According to the orders, Misrilall Mines Pvt Ltd was fined Rs 20 lakh, a penalty of Rs 15.5 lakh was imposed on Bajrang Steel and Alloys Ltd, while Nivedan Advisory Services, Multiplex Vyapar Pvt Ltd, Deepak Sarda and Deora Finance Pvt Ltd were fined Rs 5 lakh each, totalling Rs 55.5 lakh.
After observing large scale reversal of trades in BSE's stock options segment, the regulator conducted an investigation in the trading activity in illiquid stock options on the exchange from April 2014 to September 2015.
The investigation revealed that the six were among the various entities that executed non-genuine trades in the stock options segment by reversing trades with same entities on the same day with wide variations in price.
"...executing reversal trades in illiquid stock options contracts at irrational, unrealistic and unreasonable prices, tantamount to fraud on the securities market in as much as it involves non-genuine/manipulative transactions in securities and misuse of the securities market," Sebi said in orders dated June 28.
By engaging in such trades, the six entities violated PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) regulations, the Securities and Exchange Board of India (Sebi) said.