Capital markets regulator Sebi has imposed a penalty amounting Rs 25 lakh on nine entities for indulging in fraudulent trade practices in the scrip of Ruchi Soya Industries Limited nearly 10 years ago.
In its order on April 29, the Securities and Exchange Board of India (Sebi) imposed a total penalty of Rs 25 lakh on the noticees -- Aventis Biofeeds Pvt Ltd, Navinya Multitrade Pvt Ltd, Uni24 TechnoSolutions Pvt Ltd, Sunmate Trade Pvt Ltd, Shreyans Credit and Capital Pvt Ltd, Betul Oils and Feeds Pvt Ltd, Betul Minerals and Constructions Pvt Ltd, Vision Millenium Exports Pvt Ltd, and Moebius Credit and Capital Pvt Ltd -- which needs to be paid "jointly and severally".
The order came after Sebi had conducted an investigation in the trade of securities and futures of Ruchi Soya during the last half hour of trading between 15:00 hours and 15:30 hours on September 27, 2012.
It was found that seven out of these nine entities were holding net long positions in the scrip of Ruchi Soya as of September 27, 2012.
Sebi observed that three entities as buyers placed buy orders in the scrip of Ruchi Soya at a price higher than the Last Traded Price (LTP), although sell orders were available in the system for the requisite quantity at a lower price, during the investigation period.
Some of these entities have acted as sellers and colluded with their connected entities to increase the price of Ruchi Soya in the cash market to obtain a higher settlement price for the futures of Ruchi Soya expiring on September 27, 2012, Sebi in its 64-page order said.
The entities that acted as sellers included Aventis, Navinya, Uni24, Sunmate, Shreyans Credit and Capital, Vision Millenium, and Moebius Credit, Sebi said.
Sebi noted that these entities benefitted from their positions in the futures of Ruchi Soya because of the manipulation scheme carried out by their connected entities. As a result of the higher price, the entities were able to avoid losses of Rs 5.76 crore in the futures of Ruchi Soya in the NSE futures market.
Therefore, irrespective of the volume traded amongst the group entities, the entities were responsible for establishing the higher price of the Ruchi Soya scrip in the last half an hour of trading in the NSE cash market on September 27, 2012.
By doing so, they violated the provisions of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) regulations.
Meanwhile, in another order, the regulator levied a fine of Rs 5 lakh on Govind Lal Daga over non-genuine trades in illiquid stock options at BSE.
By doing so, the entity violated the provisions of PFUTP norms.