Sebi levies Rs 22 lakh fine on 3 entities for fraudulent trade in illiquid stock options

PTI, Oct 25, 2019, 3:49 PM IST

New Delhi: Capital markets regulator Sebi has levied a total penalty of over Rs 22 lakh on three entities for indulging in fraudulent trading in the illiquid stock options segment on the BSE.

The regulator imposed a fine of Rs 12.2 lakh on Excell Steel and Rs 5 lakh each on Gokul Financial Advisors Pvt Ltd and Universal Enterprises Ltd.

The orders follow a probe conducted by markets regulator from April 2014 to September 2015 after it observed large scale reversal of trades in illiquid stock options segment on the bourse that led to creation of artificial volume.

In separate orders, Sebi noted that the entities violated PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) regulations by executing reversal trades in the stock options segment.

Reversal trades are those trades in which an entity reverses its buy or sell positions in a contract with subsequent sell or buy position with the same counter party during the same day.

“It cannot be ignored that synchronization of trades in pre-determined manner had an adverse impact on the fairness, integrity and transparency in the securities market,” Sebi said in similarly worded orders.