Sebi penalises 4 entities in illiquid stock options case

New Delhi: Capital markets regulator Sebi on Monday imposed a total fine of Rs 20 lakh on four entities for indulging in non-genuine trades in the case of illiquid stock options on BSE.

In four separate orders, the regulator slapped a fine of Rs 5 lakh each on Prerna Traders Pvt Ltd, Manish Garg HUF, Irawati Enterprises LLP and Abhishek Jain HUF.

The orders came after Sebi observed large scale reversal trades in the stock options segment of BSE, leading to the creation of artificial volume.

In view of the same, the Securities and Exchange Board of India (Sebi) had conducted an investigation into the trading activity from April 2014 to September 2015.

Pursuant to the investigation, it was observed that these entities were among the various others, which indulged in execution of reversal trades in the stock options segment.

The reversal trades are alleged to be non-genuine in nature as they are executed in normal course of trading which leads to false or misleading appearance or trading in terms of generating artificial volumes, Sebi said.

By indulging in such trades in stock options, they violated the provisions of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms, it added.

In a separate order, the market regulator has slapped a monetary fine of Rs 5 lakh on Rajendrakumar Chhotamalji Mehta for indulging in fraudulent trading in the shares in Pine Animation Ltd, Sebi said in a notice.

Sebi conducted an investigation into the scrip of Pine Animation Ltd from March 2013 to January 2015, as huge rise in traded volume and price was observed on BSE in Pine's scrip. Mehta violated the PFUTP norms, it added.

Through a separate order, Sebi has levied a fine of Rs 1 lakh on Asha Prakash Shetty for violating the insider trading norms in the matter of Titan Company Ltd.

The regulator noted that Shetty, who was an employee of Titan, had failed to comply with the provisions of PIT (Prohibition of Insider Trading) norms by failing to make requisite disclosures regarding the four transactions she carried out while in the employment of the company.

She was required to make disclosures to the firm for each of the transactions within two business days.

Disclosure requirements were triggered because the traded value of Shetty's transactions in the scrip exceeds Rs 10 lakh. However, she failed to do so.

The order follows an investigation carried out by the regulator between April 2018 to March 2019.

In a separate order, the market regulator has imposed a penalty of Rs 1 lakh on Nitin Tailor for flouting disclosure norms in the case of Varun Beverages Ltd.

He failed to make the requisite disclosures, pertaining to executing transactions in Varun Beverages' shares, within the stipulated time and thereby, violated insider trading rules.

Tailor was the employee of Varun Beverages at the time of violation of rules, Sebi noted.

On five occasions, the value of his trade exceeded Rs 10 lakh. However, on one occasion, Tailor submitted that he made one disclosure in June 2017. 

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