Markets regulator Sebi on Monday imposed a total penalty of Rs 1.55 crore on two entities for indulging in fraudulent trading in illiquid stock options on the BSE.
Sebi levied a fine of Rs 84 lakh and Rs 71 lakh on Ashlar Commodities Pvt Ltd and Ashlar Securities Pvt Ltd, respectively, in two separate orders.
After observing large-scale reversal of trades in the illiquid stock options segment of the BSE, the Securities and Exchange Board of India (Sebi) conducted a probe between April 2014 and September 2015.
The investigation showed that over 81 per cent of all the trades executed in the segment involved reversal of buy and sell positions by the clients and counter-parties that resulted in generation of artificial volumes.
During the probe, the regulator observed that the trades of Ashlar Commodities in 528 stock option contracts, which resulted into artificial volume in the range of 1 per cent to 100 per cent, generated out of the 528 non-genuine trades, created a misleading appearance of trading in the scrip.
Besides, the trades of Ashlar Securities in 489 stock option contracts that resulted into artificial volume in the range of 3 per cent to 100 per cent, generated out of the 489 non-genuine trades, led to the creation of misleading appearance.
Both the entities were indulged in execution of such alleged non-genuine trades and created a misleading appearance of trading in the illiquid stock options contracts, where there was negligible participation by the public, Sebi said.
Accordingly, Sebi penalised Ashlar Commodities and Ashlar Securities for violating the provisions of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) Regulations.