Sebi levies Rs 79 lakh fine on 25 entities for fraudulent trading in Richa Industries' scrip

Markets regulator Sebi has imposed a total fine of Rs 79 lakh on 25 entities for indulging in fraudulent trading in the scrip of Richa Industries Ltd and violating market norms.

Sebi had conducted an investigation into the scrip of Richa Industries to look into the irregularities of trading activities of certain entities while dealing in the scrip of the firm.

It was observed that the scrip of Richa Industries had opened at Rs 61.1 on December 1, 2008, touched a high of Rs 161.8 on November 16, 2009, low of Rs 29 on March 16, 2009 and closed at Rs 110.2 on December 31, 2009.

Sebi found that the two groups which included these entities were connected to each other by one way or the other and had dealt in the scrip of Richa Industries in a fraudulent and manipulative manner, without real change in beneficial ownership of shares.

The entities indulged in synchronized trades, structured trades, circular trades, self trades and cross deals, thereby, creating artificial volumes and price rise in the scrip of Richa Industries.

Additionally, three entities-- Gamut Exports, Mastermind Traxim and Markup Trading-- had transferred shares in the off market to the group entities and facilitated them to indulge in manipulative trades.

Also, stock broker DBS Cholamandalam Securities being on the buy and sell side for its clients who were part of the groups, aided and abetted them in executing the manipulative and fraudulent trades. It violated Brokers and Sub-brokers Regulations.

Apart from 16 individuals, the entities included DBS Cholamandalam Securities (now known as Cholamandalam Securities), Almondz Entertainment, SMVD Securities, Sunvision Infotech, Dynamic Global Propfanchises, Jewel Garments, SMVD Financial Consultants, Sumu Consultancy and Mastermind Traxim.

For violating market norms, Sebi has levied penalties in the range of Rs 1 lakh to Rs 7 lakh on these entities.