Capital markets regulator Sebi slapped a total penalty of Rs 19 lakh on three entities for indulging in unfair trade practices in the illiquid stock options segment on the BSE.
The two firms, Hotel Polo Towers Pvt Ltd and Hollyfield Traders Pvt Ltd, have been fined Rs 5 lakh each, while a penalty of Rs 9 lakh has been imposed on Jaideep Halwasiya for violating the provisions of Prohibition of Fraudulent and Unfair Trading Practices (PFUTP) regulations, Sebi said in three separate orders.
During an investigation between April 2014 and September 2015, Sebi found that a total of over 2.9 lakh trades, comprising 81.38 per cent of all the trades executed in bourse's stock options segment, involved reversal of buy and sell positions by the clients and counterparties in a contract.
Sebi noted that the three entities were among those clients whose reversal trades involved squaring off transactions with significant difference in the sell and buy value and resulted in generation of artificial volumes.
"... the trades executed by the Noticee were not genuine trades and being non-genuine, created an appearance of artificial trading volumes in respective contracts," Sebi said in similarly worded, but separate orders.
The orders are in line with Sebi's announcement in April 2018 wherein it had decided to take action in a phased manner against 14,720 entities for fraudulent trade in illiquid stock options segment.
In separate orders, the regulator also levied a total penalty of Rs 6 lakh on two individuals for manipulating the share price of Shree Shaleen Textiles Ltd.
The regulator, during a probe, observed that Shyam Rathi HUF and Nishith M Shah HUF deliberately increased the price of the scrip by placing orders higher than the last traded price (LTP) and created misleading appearance of trading in the scrip.
"Trading pattern of the Noticee, which was fraudulent and deceptive, affects the normal price discovery mechanism in the securities market," Sebi said in orders dated Jun 25.
Consequently, a fine of Rs 4 lakh was imposed on Shyam Rathi HUF and Rs 2 lakh on Nishith M Shah by the markets watchdog.
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