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Illiquid stock options: Sebi imposes Rs 30 lakh fines on two entities for fraudulent trading

The regulator has levied a fine of Rs 25 lakh and Rs 5 lakh on Topmost Commercial Pvt Ltd and Tradebulls Enterprise Pvt Ltd, respectively.

PTI|
Last Updated: May 28, 2020, 09.08 PM IST
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Sebi-
By indulging in such activities, the entities have violated the provision of the PFUTP norms, it added.
New Delhi: Markets regulator Sebi on Thursday imposed a total penalty of Rs 30 lakh on two entities for indulging in fraudulent trading in illiquid stock options on the BSE.

The regulator has levied a fine of Rs 25 lakh and Rs 5 lakh on Topmost Commercial Pvt Ltd and Tradebulls Enterprise Pvt Ltd, respectively.

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 in the segment 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 sale positions by the clients and counter-parties in a contract that resulted into generation of artificial volumes.

The trades carried out by these entities were non-genuine in nature and created a misleading appearance of trading in the illiquid stock options contracts, where there was negligible participation by the public, the regulator said.

By indulging in such activities, the entities have violated the provision of the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms, it added.

Separately, the regulator has imposed a penalty of Rs 2 lakh on RCG Finance in the matter of GFL Financials India Ltd for not making requisite disclosures about acquisition of shares in the company to the stock exchanges.

Thus, it has failed to comply with the provisions of the SAST (Substantial Acquisition of Shares and Takeover) norms.
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