Mumbai: Capital market regulator Sebi today slapped a total penalty of Rs 20 lakh on three entities including two brokers for fraudulent trading in the shares of various companies in 2009.
Securities and Exchange Board of India (Sebi) has imposed a penalty of Rs 10 lakh on one Suresh Hanswal for indulging in synchronised/structured/circular trading that created artificial volumes in the firms shares, as well as influencing the price of the scrips. Besides, the regulator has imposed Rs 5 lakh fine each on -- Finquest Securities and PUG Stock Brokers -- for violating broker norms by permitting operation of the trading accounts of clients who were allegedly involved in manipulative trades.
The penalties were imposed by the market watchdog by way of three separate orders today. The case relates to irregularities in the share trading of -- Allcargo Global Logistics, Asian Star Company, KSL & Industries, Mavens Biotech, Panoramic Universal, Rasi Electrodes, Sat Industries, Ushdev International, KBS Capital Management, Lotus Eye care Hospitals, MVL Ltd and Anil Products. Sebi probe had found that certain entities, referred to by the regulator as 'Mehta Group', had fraudulently dealt in the shares of the companies. While Hanswal was found to have colluded with other Mehta Group entities in carrying out the fraudulent activities, the two brokers had dealt in the shares on behalf of their clients who belonged to the 'Mehta Group'.
In its order against Finquest Securities, Sebi said that the broker had "facilitated the actual manipulators in opening and operating the trading accounts in the name of its clients and also failed to carry out its business with due diligence, skill, care etc". Similar observations were made against PUG Stock Brokers wherein Sebi said that the entity had allowed operation of the trading account of its clients who were allegedly involved in manipulative trades, by a third party and had failed to do 'in person verification' of the clients, among others.
