NEW DELHI: Markets regulator SEBI has levied a total penalty of over Rs 27 lakh on five entities for fraudulent and manipulative trading in illiquid stock options on BSE. Jahangirabad Finance Co Pvt Ltd, Renesola India Pvt Ltd, Rakesh Garg, Rattan Ispat Pvt Ltd and Ritman Commodities are the entities facing action, as per separate orders by the regulator.
SEBI conducted an investigation into the trading activity in illiquid stock options on BSE from April 2014 to September 2015 after observing a large-scale reversal of trades in the bourse's stock options segment.
The regulator observed that the entities placed buy and sell orders in a synchronised manner within seconds of each other and reversed the trades within a short time with wide variation in prices of the trades.
The entities generated trading volumes without any change of beneficial ownership, thereby creating an appearance of artificial trading, Securities and Exchange Board of India (SEBI) said. Such trades executed by the entities were non-genuine in nature, the regulator said.
By indulging in such trades, the entities violated PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) regulations, SEBI said.
Accordingly, a fine of Rs 5 lakh each was imposed on Rattan Ispat, Ritman Commodities and Jahangirabad Finance, while a penalty of Rs 6 lakh and Rs 6.5 lakh were levied on Rakesh Garg and Renesola India, respectively.
The orders are in line with Sebi's announcement in April 2018 to take action in a phased manner against 14,720 entities for fraudulent trade in the illiquid stock options segment. Since October, the regulator has passed more than 60 orders against such entities.