Markets regulator Sebi has levied a total fine of Rs 22 lakh on four firms for unfair trade in the illiquid stock options segment on the BSE. Sarwottam Ispat Ltd has been fined Rs 7 lakh, while Dowell Fiscal Services Pvt Ltd, GCM Capital Advisors Ltd and Sai Ram Services have been slapped with penalties of Rs 5 lakh each.
This follows an investigation conducted by the regulator between April 2014 and September 2015 when Sebi found that 81.38 per cent of all the trades executed in stock options segment of the bourse were non-genuine trades. Sebi found that the four firms were among the various entities which indulged in execution of reversal trades in stock options segment and their trades resulted in generation of artificial volume in the segment.
"The trading behaviour of the Noticee confirms that such trades were not normal and wide variation in prices of the trades in the same contract in a short time without any basis for such wide variation, all indicate that the trades executed by the Noticee were not genuine trades," Sebi said in similarly worded separate orders. The regulator also noted that the execution of reversal trades in illiquid stock options contracts at "irrational, unrealistic and unreasonable prices, tantamount to fraud on the securities market."
By doing so, the firms have violated provisions of Prohibition of Fraudulent and Unfair Trading Practices (PFUTP) regulations.
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