SEBI Slaps Rs5 Lakh Fine on Mahesh Agrawal HUF for Trading in Illiquid Stocks Options at BSE
Moneylife Digital Team 04 December 2024
Market regulator Securities and Exchange Board of India (SEBI) has imposed a penalty of Rs5 lakh on Mahesh Agrawal Hindu undivided family (HUF) found guilty of engaging in non-genuine trading activities within the illiquid stock options segment of BSE. 
 
In an order, Barnali Mukherjee, adjudicating officer (AO) of SEBI, articulated that the trading behaviour of Mahesh Agrawal HUF confirms that such trades were not normal indicating that the trades executed were not genuine trades and being non-genuine, 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 investigation into these trading activities spanned from April 2014 to September 2015. SEBI discovered that a staggering 291,643 trades, accounting for about 81.38% 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.
 
SEBI also mentioned that such trades were alleged to be non-genuine and created a false or misleading appearance of trading in terms of artificial volumes in stock options and, therefore, were alleged to be manipulative and deceptive.
 
Mahesh Agrawal HUF 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, "Such practices not only mislead other market participants but also undermine the fairness and transparency of the trading environment."
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