SEBI Slaps Rs20 Lakh Penalty on 4 for Trading in Illiquid Stock Options
Moneylife Digital Team 07 November 2024
Market regulator Securities and Exchange Board of India (SEBI) has imposed penalties of Rs20 lakh on four 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 Jaiswal Hindu united family (HUF), Pritamkumar Nenmal Shah, Motilal Makhanlal Holdings Pvt Ltd and Mohit Nagjibhai Ramani.
 
In four separate orders, Barnali Mukherjee, adjudicating officer (AO) of SEBI, articulated that the trading behaviour of the noticees confirmed that such trades were not regular, indicating that the trades executed by these four created an appearance of artificial trading volumes in respective contracts in violation of Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a) of PFUTP Regulations, 2003.
 
SEBI's investigation into these trading activities spanned from April 2014 to September 2015. SEBI discovered that a staggering 2,91,744 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 implicated entities executed trades characterised by reversal trades, which typically involve buying and selling the same securities almost simultaneously to create an illusion of heightened trading activity, the market regulator says, adding, "Such practices not only mislead other market participants but also undermine the fairness and transparency of the trading environment."
 
Specifically, SEBI says individuals involved executed varying numbers of trades, with Yogesh Jaiswal HUF executing two trades, Mr Shah executing four trades, Motilal Makhanlal Holdings executing 17 trades, and Mr Ramani carrying out 40 trades.
 
SEBI's decision to impose a Rs20 lakh fine on the four 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.
 
Comments
Array
Free Helpline
Legal Credit
Feedback