SEBI slaps Rs 40 lakh fine on eight entities in illiquid stock options case

By: |
September 01, 2021 3:51 PM

The Securities and Exchange Board of India (Sebi) observed large scale reversal of trades in stock options segment of BSE.

SEBI buildingIt noted that such large scale reversal of trades in stock options lead to creation of artificial volume at BSE. (File)

Capital markets regulator Sebi has imposed penalties totalling Rs 40 lakh on eight entities, including individuals, for indulging in non-genuine trades in illiquid stock options at BSE.

In eight separate orders, the regulator levied a fine of Rs 5 lakh each on Nikita Rungta, Aakash Prakash Shah, Abha Mohunta, Aachman Vanijya, Abhi Portfolio, A C Agarwal Commodities, Vinay Ramanlal Shah HUF and Vinodkumar M Jain.

The Securities and Exchange Board of India (Sebi) observed large scale reversal of trades in stock options segment of BSE.

It noted that such large scale reversal of trades in stock options lead to creation of artificial volume at BSE.

In view of the same, the regulator conducted an investigation into the trading activities of certain entities in illiquid stock options at BSE for the period April 2014 to September 2015.

Pursuant to investigation, it was observed that over 2.91 lakh trades comprising substantial 81.38 per cent of all the trades executed in stock options segment of BSE during the investigation period were non genuine trades.

The non-genuine trades resulted into creation of artificial volume to the tune of 826.21 crore units or 54.68 per cent of the total market volume in stock options segment of BSE.

It was observed that these eight entities were among the various entities which indulged in execution of reversal trades in stock options segment of BSE.

According to Sebi, these entities were instrumental in the creation of artificial volume in the illiquid stock option contracts at BSE during the investigation period by executing reversal or non-genuine transactions in the illiquid stock options segment at the exchange.

By indulging in such trades, they violated the provisions of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms, Sebi said in orders passed on Tuesday.

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