Sebi slaps Rs 2.38 crore fine on 23 entities, individuals for fraudulent trading activities

Stock market regulator has slapped a total penalty of Rs 2.38 crore on 23 entities for indulging in fraudulent trading activities in the shares of Steel Exchange India Ltd (SEIL).

The fine has been levied in the range of Rs 5 lakh to Rs 8 lakh on 23 entities and individuals.

An investigation was carried out by the regulator into the shares of SEIL during July to December 2017 period.

It was observed that certain promotional SMSes were circulated among investors during October to November 2017 while the company's share price was around Rs 100, which then reached to Rs 133 before falling to Rs 42.95.

Further, Sebi noted that the entities were connected to each other and had entered into synchronised trades and reversal trades among one another in order to create artificial volume in the scrip of SEIL.

They were repetitively and in significant quantities entering into reversal and synchronised trades in the scrip of SEIL during the investigation period.

The creation of artificial volume by the entities was accompanied by the circulation of false-positive SMSes in favour of SEIL, which further attracted the investors into dealing in the shares of the company, Sebi said.

However, as seen in the instant case, the share price fell significantly thereafter, which may have resulted in losses to the genuine investors, it added.

In an order passed on Friday, Sebi's Adjudicating Officer B J Dilip said the entities and individuals violated provisions of PFUTP Regulations.

PFUTP pertains to Prohibition of Fraudulent and Unfair Trade Practices.

Among others, some of them had failed to comply with the summons issued by Sebi.

According to another order passed on Monday, the watchdog levied a penalty of Rs 5 lakh on Pratik S Patel for its failure to comply with the summons issued by Sebi in the matter of Steel Exchange India Ltd.