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Markets regulator Sebi has imposed a total fine of over Rs 18 lakh on three entities for indulging in fraudulent and manipulative trades in the illiquid stock options segment of the BSE. The three entities are Kusum Traders, Dinesh Kumar Somani and Sanket Lalit Parikh, according to separate Sebi orders.
A penalty of Rs 5 lakh each has been levied on Kusum Traders and Dinesh Kumar, while Sanket Parikh was fined Rs 8.6 lakh, totalling Rs 18.6 lakh. In April 2018, Sebi announced to take action in a phased manner against 14,720 entities for fraudulent trades in the illiquid stock options segment and has passed several orders in the past few months against such entities The Securities and Exchange Board of India (Sebi), after observing large-scale reversal of trades in stock options segment of the bourse, conducted an investigation between April 2014 and September 2015. The probe found that more than 80 per cent of all the trades executed in the segment were non-genuine in nature and the three entities were among the various entities that executed such trades by reversing trades with same entities on the same day with wide variation of price.
The trades executed by the entities were not genuine and being non-genuine, created an appearance of artificial trading volumes, the regulator said. "There was no change in beneficial ownership of the units traded in aforesaid reversal trades, and volume generated was artificial which gave misleading appearance of trading," Sebi said. By doing so, the entities violated the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) regulations, thereby making them liable for monetary penalty, Sebi said.