Sebi Fines 6 for Non-Genuine Trades on BSE

New Delhi, Mar 24 (PTI) Markets regulator Sebi on Monday imposed fines totalling Rs 35 lakh on seven individuals for indulging in non-genuine trades in the illiquid stock options segment on the BSE.

The regulator levied a penalty of Rs 5 lakh each on Daxeshkumar Natvarlal Patel, Sattu Yadav, Mukesh Agarwal, Ratan Lal, Sat Devi, Sohan Lal Dugar and Rati Agarwal.

The orders came after the Securities and Exchange Board of India (Sebi) observed large-scale reversal of trades in the illiquid stock options segment of BSE, leading to the creation of artificial volume.

Thereafter, the markets watchdog conducted an investigation into the trading activities of certain entities in illiquid stock options on BSE for the period April 2014 to September 2015.

According to Sebi, reversal trades are the trades in which an entity reverses its buy or sell positions in a contract with subsequent sell or buy positions with the same counterparty.

The reversal trades are alleged to be non-genuine trades as they lack basic trading rationale and allegedly lead to a false or misleading appearance of trading, leading to the generation of artificial volume, the regulator said in the order.

"The trading behaviour of the noticee (six individuals) confirms that such trades were not normal, indicating that the trades executed...were not genuine trades and being non-genuine, created an appearance of artificial trading volumes in respective contract," Sebi said.

Accordingly, these six individuals flouted the violation of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms stand established, it added.