Markets regulator Sebi today imposed a penalty of Rs 20 lakh on J V Stock Broking for indulging in fraudulent trading in the shares of Mindvision Capital.
Besides, the Securities and Exchange Board of India (Sebi) has also levied a fine of Rs 5 lakh on stock broker SPFL Securities Ltd for failing to carry out due diligence with regard to the trading pattern of J V Stock Broking Pvt Ltd (JVSL).
Sebi had conducted an investigation in the scrip of Mindvision Capital Ltd (MCL) -- formerly known as Kailash Ficom -- to ascertain any violation of the capital market norms by certain connected entities during the period from June 17, 2009 to February 08, 2010.
During the period of investigation, JVSL had bought 41,665 shares and sold 39,165 shares. Out of these, 7,323 shares were executed through 19 self-trades in 12 days, which constituted 17.57 per cent of the total buy volume and 18.70 per cent of total sell volume of JVSL.
The self-trades executed by JVSL portrayed a misleading appearance of trading, as it does not make any sense to buy and sell to itself, Sebi noted in an order.
"Noticee 1 (JVSL) carried out self-trades with the intention not to change the beneficial ownership of the shares of MCL, but with an intention to operate only as a device to create false, misleading appearance of trading which had mislead the investors," Sebi said.
Noting that JVSL "had indulged into self-trades which are manipulative/ unfair/ fraudulent in nature", Sebi said that it has violated PFUTP (Prohibition of Fraudulent Trade Practices Relating to Securities Market) Regulations.
Sebi also said that SPFL was charged in the capacity of stock broker for its failure to carry out proper due diligence, which resulted in execution of self-trades by JVSL.
"Noticee 2 (SPFL) in the capacity of stock broker by not exercising due diligence has violated the provisions of... Sebi (Stock Brokers and Sub-brokers) Regulations," the regulator added.
For the violations, Sebi has levied a fine of Rs 20 lakh on JVSL and Rs 5 lakh on SPFL.
In a separate order, Sebi imposed a penalty of Rs 15 lakh on Dadima Capital for disclosure lapses in the matter of KCCL Plastics.
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