Sebi imposes Rs 24 lakh fine on 9 entities for fraudulent trade in Vertex Spinning case

Market regulator Sebi has imposed a fine totalling Rs 24 lakh on nine entities for fraudulent trading in the matter of Vertex Spinning Limited (VSL).

The regulator has levied a fine of Rs 1 lakh on VSL and Rs 11 lakh on its promoter and Managing Director Suresh Sharma, the Securities and Exchange Board of India (Sebi)said in its order.

In addition, fines ranging between Rs 1 lakh to Rs 2lakh have been imposed on seven other entities -- Mansukh Finance & Investments, Mithalesh Suresh Sharma, SS Forging & Engineering Ltd, Daljeet Singh Matharu, Ram Pratap Singh, Ashok Sharma and Twinstar Finvest Pvt Ltd.

 

The regulator had conducted a probe between March 2006 and March 2007 in the scrip of Vertex Spinning.

Sebi, in its probe, found that VSL and its promoter and MD Suresh Sharma, who was overall responsible for the day to day operations of the company, failed to provide the necessary details of the non- implementation of corporate announcements, among others, as sought by the regulator.

Further, the regulator said that all the entities (barring VSL) were involved in synchronised trades and cross deal trades executed with the intention to create artificial volume in the shares of VSL.

Majority of these entities were directly or indirectly related with VSL, it added.

"All synchronized trades, cross deal trades, incremental trades with ulterior motive of price of the scrip is increased, was all preplanned act of Suresh Sharma as a detailed promoter/director and related entities of Vertex Group were creating huge volume of false trading in the scrip of VSL," the regulator said in its order on Wednesday.

By doing so, they have violated the provisions of Prohibition of Fraudulent Trade and Unfair Trade Practices (PFUTP).

In a separate order, the regulator slapped a fine of Rs 5 lakh on Rampuria Steel for indulging in fraudulent trading in illiquid stock options on the BSE.

After observing large-scale reversal of trades in the illiquid stock options segment of the BSE, Sebi conducted a probe in the segment between April 2014 and September 2015.

The trades carried out by the noticee were non-genuine in nature and created a misleading appearance of trading in the illiquid stock options contracts, where there was negligible participation by the public.

By doing so, it has violated the provisions of PFUTP regulations, Sebi said.