SEBI Imposes Rs40 Lakh Fine on 8 Entities for Non-genuine Trading Activities
Moneylife Digital Team 01 October 2024
Market regulator Securities and Exchange Board of India (SEBI) has imposed penalties of Rs40 lakh on eight entities found guilty of engaging in non-genuine trading activities within the illiquid stock options segment of the Bombay Stock Exchange (BSE). Each implicated entity has been fined Rs5 lakh for participating in these fraudulent activities.
 
The entities penalised include: Yogesh Goyal Hindu undivided family (HUF), Manju Devi Poddar, Navjeet Singh Malhotra, Narendra Kumar Maheshwari, Sandip Agarwal, CHP Finance Pvt Ltd, Vijay Agarwal, and Sunita Sethia.
 
In eight separate orders, Barnali Mukherjee, adjudicating officer (AO) of SEBI, articulated that the trading behaviours exhibited by these entities were indicative of non-genuine trades, which contributed to an artificially inflated volume of trading in their respective contracts.
 
The investigation into these trading activities spanned from April 2014 to September 2015. SEBI discovered that a staggering 291,744 trades, accounting for about 81.40% of all trades executed in the stock options segment, were potentially non-genuine. This alarming statistic underscores how these activities distorted the market by creating artificial volumes.
 
The trades executed by the implicated entities were characterised by reversal trades which, typically, involves buying and selling the same securities almost simultaneously to create the illusion of high trading activity. 
 
Such practices not only mislead other market participants but also compromise the fairness and transparency of the trading environment.
 
Specifically, the individuals involved executed varying numbers of trades, with Vijay Agarwal executing four trades, CHP Finance 18 trades, Sandip Agarwal four trades, Narendra Kumar Maheshwari eight trades, Navjeet Singh Malhotra 10 trades, Manju Devi Poddar two trades, Yogesh Goyal HUF two trades, and Sunita Sethia executing four trades.
 
SEBI's decision to impose Rs40 lakh fine on the eight entities for non-genuine trading activities highlights its unwavering commitment to market integrity. The regulator's investigation uncovered a concerning prevalence of deceptive trading practices that artificially inflated volumes in the stock options segment.
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