Sebi levies Rs 20.4 lakh fine on 4 firms for fraudulent trade in illiquid stock options

Capital markets regulator Sebi has fined four firms a total amount of Rs 20.4 lakh for carrying out fraudulent trading in the illiquid stock options segment of the BSE. The regulator in separate orders noted that the firms violated provisions of Prohibition of Fraudulent and Unfair Trade Practices by executing reversal trades in the stock options segment of the bourse.

Noting that fraudulent trades deserve imposition of monetary penalty, Sebi levied a fine of Rs 5 lakh each on Greenbucks Securities Pvt Ltd, Greenbucks Comtrade Pvt Ltd, Tansy Trading Pvt Ltd, and Rs 5.40 lakh on Ashiana Ispat Ltd. The orders follow a probe conducted by the regulator between April 2014 and September 2015 wherein Sebi noted that the four firms were among the various entities that indulged in the execution of reversal trades in the stock options segment of the BSE.

"The trades entered by the Notice were reversed on the same day within few minutes with the same counterparty at a substantial price difference without any basis for significant change in the contract price which indicates that these trades are artificial and non-genuine in nature," Sebi said in similarly worded separate orders. Besides, the orders noted that "the non-genuine and deceptive trades as found in this case are covered under the definition of 'fraud' and dealing of Notice was fraudulent."

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