SEBI Imposes Rs5 lakh Fine on Bansal Impex for Dealing in Illiquid Stock Options on BSE
Moneylife Digital Team 17 March 2023


Market regulator Securities and Exchange Board of India (SEBI) has imposed a penalty of Rs5 lakh on Bansal Impex for engaging in illiquid stock options on BSE. SEBI found 2.91 lakh trades comprising a substantial 81.40% of all the trades executed by Bansal Impex in the stock options segment of BSE from 1 April 2014 to 30 September 2015 were non-genuine trades.

In the ex- parte order Aparna Thyagarajan, adjudicating officer (AO) of SEBI, says, “I observe that the material available on record does not quantify any disproportionate gains or unfair advantage, if any, made by the noticee (Bansal Impex) and the losses, if any, suffered by the investors due to such violations on the part of the said noticee. However, the noticee had entered into non-genuine trades, which created a false and misleading appearance of trading volumes in the respective contract at pre-meditated prices, thereby leading to a violation of regulations 3(a),(b),(c),(d) and 4(1),(2)(a) of the PFUTP regulations, 2003.”

The perusal of the trade log of Bansal Impex revealed that on 9 March 2015, it entered into a buy trade with the counterparty, Jagdish Kumar Amrutlal Akhani, for 150,000 units at Rs17.1 per unit, which was reversed by a sell trade within 13 seconds, with the same counterparty for 150,000 units at Rs19.95 per unit.

The reversal trade with the same counterparty on the same day with the noticeable price difference in buy and sell price indicates that these trades were non-genuine in nature, the market regulator says.

Such a short span of time taken for reversing the trades in an illiquid stock option contract and the wide variation in prices of the contract makes it evident that these trades executed by the entity were not genuine and indicates a prior meeting of minds with an intent to execute the reversal trades at a pre-determined price.

“Impugned transactions are deceptive devices to create a desired loss or profit. Such synchronised trading is violative of transparent norms of trading in securities,” AO Thyagarajan says.

Since Bansal Impex failed to reply to the show cause notice that was issued against them, SEBI ordered a penalty of Rs5 lakh.

(Adjudication Order No.Order/AT/NT/2022-23/24646    Date: 16 March 2023)

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