New Delhi (Agency): India’s financial regulatory body, Sebi, took decisive action on Tuesday against several individuals and a firm over questionable trading activities in the stock market.
Sebi (The Securities and Exchange Board of India) imposed fines on four individuals for their involvement in “non-genuine” trades on BSE, a prominent stock exchange in India. These trades occurred within the illiquid stock options segment, leading to deceptive trade volumes on the exchange.
The individuals penalized are Manish Kumar Kanodia, Seeta Devi Agrawal, Seema Charul Maisheri, and Chandrani Dutta. Each person was fined Rs 5 lakh, resulting in a cumulative penalty of Rs 20 lakh.
Following some irregularities in trading volumes, Sebi undertook an investigation into trading activities between April 2014 and September 2015. This investigation revealed that these four traders were among several involved in “reversal trades.”
Sebi’s findings shed light on the nature of reversal trades. These trades are said to be “non-genuine” because they are executed during regular trading. Such trades can give a “false or misleading appearance” of trading by artificially increasing the trading volumes. Sebi stated this clearly in its order, emphasizing that these actions distort the genuine appearance of trading activity.
These traders, by engaging in such actions, went against the PFUTP norms. PFUTP stands for Prohibition of Fraudulent and Unfair Trade Practices, a set of guidelines meant to ensure the transparency and fairness of trading.
In another order, Sebi turned its attention to Indo Thai Commodities, a trading firm. This firm was involved in unauthorized paired contracts on the now-defunct platform, the National Spot Exchange Ltd (NSEL). Sebi expressed concerns, noting that by allowing their clients to participate in these paired contracts, Indo Thai Commodities exposed them to risks. These risks arose from trading in a product that didn’t have regulatory approval.
Sebi was unequivocal in its criticism of Indo Thai Commodities. The regulator pointed out that the trading activities of the company not only tainted its reputation but also made Sebi doubt its character, competence, and honesty. This compelled Sebi to lodge a criminal complaint against Indo Thai Commodities, as well as several other brokers involved in similar actions.
Given these serious breaches, Sebi decided to suspend Indo Thai Commodities’ registration. This suspension will last for three months from the date of Sebi’s order. However, if a competent court either discharges or acquits Indo Thai Commodities earlier, the suspension might be reviewed.
To conclude, Sebi has once again taken stern action to ensure that the Indian stock market remains transparent, fair, and free from fraudulent activities. Both individual traders and trading firms have been held accountable for their dubious practices, reflecting Sebi’s commitment to maintaining the integrity of the market.