Fraudulent trading: Sebi imposes Rs 1.20 cr fine on 16 individuals

NEW DELHI: Markets regulator Sebi on Friday imposed a total fine of Rs 1.20 crore on 16 individuals for indulging in fraudulent trading and creating artificial volumes with respect to shares of Parichay Investments Ltd (PIL).

An investigation was conducted into the trading of PIL shares during July 21, 2010 to August 30, 2011 period.

A fine of Rs 10 lakh each has been imposed on eight individuals and Rs 5 lakh each on eight other individuals. Together, the penalty amounts to Rs 1.20 crore, according to an order.

During the investigation, it was found that the individuals were directly or indirectly connected to each other and indulged extensively as a group while executing matched trades. Also, some of them were involved in executing repetitive match trades, self-trades and price manipulation, the order said.

Referring to the 16 individuals, Sebi said they had intended to buy PIL shares, artificially increase its price, and thereafter, sell their shares at inflated prices.

“It is therefore concluded that the entire scheme of the noticees was manipulative and fraudulent in nature which had created false and misleading appearance of trading in the scrip,” it noted.

The 16 individuals have been referred to as noticees.

In a separate order, the watchdog slapped penalties totalling Rs 42 lakh on 26 individuals for fraudulent trading in the shares of PSIT Infrastructure & Services Ltd.

An investigation was conducted into the trading and dealings in the company’s shares after the regulator noticed abnormal movement in the price on the BSE during May 1, 2012 to July 31, 2015 period.

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Sebi said that the individuals acted in a manipulative manner for increasing the price of the scrip.

“… any manipulation in the volume or price of the stocks caused by vested interest always erodes investor confidence in the market so that investors find themselves at the receiving end of market manipulators. Hence, anyone could have been carried away by the unusual fluctuations in the price and been induced into investing in the said scrip,” Sebi said.

The regulator also noted that this kind of activity seriously affects the normal price discovery mechanism of the securities market.



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