SEBI slaps Rs 50 lakh penalty on this broker for fraudulent trade

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Updated: April 2, 2019 7:08:50 PM

The firm violated PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) regulations, the order said.

Markets regulator SEBI had slapped a fine on a broker for resorting to fraudulent trade practices.

Markets regulator SEBI had slapped a fine on a broker for resorting to fraudulent trade practices. Matri Mangal Mantri Trading has been fined with a Rs 50 lakh penalty for resorting to fraudulent trade practices in illiquid stock options on BSE.

The markets regulator has conducted an investigation from April 2014 to September 2015 after observing a large-scale reversal of trades in the bourse’s stock options segment.

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“Investigation revealed that during the Investigation Period, a total of 2,91,643 trades comprising 81.38% of all the trades executed in the BSE Stock Options Segment were trades which involved reversal of buy and sell positions by the clients and counterparties in a contract. Matri Mangal Trading Private Limited (hereinafter be referred to as, the “ Noticee”) was one such client whose reversal trades involved squaring off open positions with a significant difference without any basis for such change in the contract price”, SEBI said.

SEBI came to know about the discrepancies after it noted 81.38 per cent of all the trades executed in stock options of the exchange were non-genuine. The above mentioned broker was among the entities that executed manipulative reversal trades, creating a misleading impression of trading, said an order dated March 29.

The firm violated PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) regulations, the order said.

The orders issued by the markets regulator are in accordance with its announcement in April 2018 to take action in a phased manner against 14,720 entities for fraudulent trade in the illiquid stock options segment.

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