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Sebi slaps fine on entity for illegal profits in telco shares

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SummarySebi today imposed a penalty of Rs 4 lakh on one Rajesh Kumar after finding him guilty of making illegitimate profits through synchronised trades executed at fictitious prices in securities of telecom firms Idea and Tata Teleservices Ltd.

Sebi today imposed a penalty of Rs 4 lakh on one Rajesh Kumar after finding him guilty of making illegitimate profits through synchronised trades executed at fictitious prices in securities of telecom firms Idea and Tata Teleservices (Maharashtra) Ltd.

The market regulator said Kumar had executed structured deals in National Stock Exchange's future & Option segment in illiquid option contract of Idea and Tata Teleservices (Maharashtra) Ltd (TTML) in July 2008.

Sebi said the trades were conducted at fictitious prices and created artificial volumes and misleading appearance of trading in the shares on account of collusive activities of the buying and selling parties.

After considering all the facts and circumstances of the case, Sebi said it has imposed "a monetary penalty of Rs 4 lakh... on the noticee (Kumar)."

In Idea cellular counter, Sebi said Kumar trading through Religare had purchased a total of 21,600 shares from Nirmala Sharma at an average price of Rs 10 apiece and sold the same at Re 1 apiece again to Sharma on July 21, 2008.

Kumar had reversed his entire buy trades for 21,600 shares within six minutes only by selling these scrips with the same counter party.

"Thus, it is amply clear that the he had executed structured trades with his counter party Sharma at fictitious prices and earned positive close out difference of Rs 1,94,400," Sebi said.

In a similar manner, in option contract of TTML, Kumar trading through Religare had bought 26,125 shares at an average price of Rs 26.60 and sold the same at an average price of Rs 15 per share with Nirshilp Securities.

Also, Kumar trading through India Infoline acquired 73,150 scrips of TTML at Rs 14.90 apiece and offloaded the same at an average price of Rs 19.90 per share with Mukesh Kumar.

"These trades (regarding TTML)were executed with buy and sell time difference of 16 seconds while trading with Religare on sell side and with India Infoline on buy side," Sebi noted.

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