Markets regulator Sebi today slapped a total penalty of Rs 6.75 crore on 20 entities for indulging in price manipulation and creating artificial volume in the shares of Sarang Chemicals.
Besides, the regulator has imposed a fine of Rs 8 lakh each on Atlanta Share Shopee and Presilco Impex for violating Sebi (Stock Brokers and Sub Brokers) Regulations by failing to exercise due diligence and care which ultimately assisted the 20 entities in "manipulation of price/volume in the scrip".
The regulator's order has come following an investigation in the shares of the firm to ascertain whether the entities had manipulated price or volume of the scrip in violation of various norms during the period from January to June, 2011.
According to the Securities and Exchange Board of India (Sebi), the 20 entities had bought over 2.70 crore shares and sold more than 7.24 crore shares during the investigation period.
In an order, Sebi said that in respect of allegation of price manipulation in the scrip of the firm by way of executing trade at a price more than the last traded price (LTP), two entities "had majorly executed trades beyond LTP and contributed to price rise in the scrip".
Sebi said that few of the entities by trading voluminously amongst themselves had first generated interest among the other investors to trade in the shares and when the investors started trading due to such false impression of market, some of them had off-loaded shares in the market at an increased price.
Such pattern of trading clearly reveals the "ulterior /malafide intent" and certainly such activities are in the violation of the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, the regulator said.
According to the order, Atlanta Share Shopee and Presilco Impex had executed for the 11 entities trades for over 2.13 crore shares during the investigation period.
Atlanta Share Shopee and Presilco Impex should have taken due care and diligence while executing the orders of their clients including possibilities of the clients indulging in manipulative practices, Sebi said, adding that such trades could not have taken place without their assistance while executing the buy and sale orders.
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