Capital market regulator Sebi has slapped a penalty of Rs 2 crore each on Yes Investments and Blue Peacock Securities for indulging in fraudulent activities while dealing in securities.
Investigation conducted by the Securities and Exchange Board of India (Sebi) had revealed, among others, that Yes Investments and Blue Peacock Securities had created a false impression of artificial demand in the scrips by placing buy orders with large quantities below the market price.
In two similarly-worded orders dated August 27, Sebi has held that "the charges leveled against the noticee are proved and that the allegation of violation of provisions of...PFUTP ((Prohibition of Fraudulent and Unfair Trade Practices) Regulations by the noticee stand established".
Sebi found that between July 1, 2009 to December 31, 2010, the intention of two entities "of placing buy orders away from the prevailing market prices was not for genuine trading but only for artificially enhancing levels of demand, which constitutes a manipulative practice in the market".
They had also sold shares in the market at the time when its large buy orders at below the prevailing market price were pending and subsequently cancelling these buy orders prior to conducting majority of the buying activity.
The entities were found to be "involved in BAIT and SWITCH activity" that is they had entered buy/sell orders lower/ higher than the market price, fully disclosed the orders but actually transacted on the opposite side in the market, across various scrips and for several days.
Further, they had "manipulated the order book" by giving false impression in the market about the demand and supply of various scrips and as a result misled the investors.
Accordingly "a penalty of Rs 2 crore" has been imposed each on Yes Investments and Blue Peacock Securities.
The investigation was initiated following alerts by the National Stock Exchange (NSE).
