Sebi slaps Rs 30-lakh fines on 6 entities in illiquid stock options case

Markets regulator Sebi has imposed a penalty totalling Rs 30 lakh on six entities, including individuals, for indulging in non-genuine trades in illiquid stock options at the BSE.

In six separate orders, the regulator has levied a fine of Rs 5 lakh each on Lotwala Mikil Vijaykumar HUF, Rajendra Kumar Jain, Rajendra D Thakkar, Abhishek Agarwal, Radha A Gupta and Bimla Devi Mundra.

The Securities and Exchange Board of India (Sebi) observed large-scale reversal of trades in stock options segment of the BSE. It noted that such large-scale reversal of trades in stock options leads to creation of artificial volume at BSE.

In view of the same, the regulator conducted an investigation into the trading activities of certain entities in illiquid stock options at BSE for the period April 2014 to September 2015.

Pursuant to the investigation, it was observed that over 2.91 lakh trades comprising substantial 81.38 per cent of all the trades executed in stock options segment of the BSE during the investigation period were non-genuine trades.

The non-genuine trades resulted into creation of artificial volume to the tune of 826.21 crore units or 54.68 per cent of the total market volume in stock options segment of the BSE.

It was observed that these eight entities were among the various entities which indulged in execution of reversal trades in stock options segment of the BSE.

According to Sebi, these entities were instrumental in the creation of artificial volume in the illiquid stock option contracts at BSE during the investigation period by executing reversal or non-genuine transactions in the illiquid stock options segment at the exchange.

By indulging in such trades, they violated the provisions of the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms, Sebi said in six separate orders passed during December 3-8.

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