SEBI imposes ₹1.55 crore fine on 23 entities for disregarding trading norms

The order came as MCX submitted to SEBI that it observed links of certain organizations with North End Foods Marketing (NEFM) and was holding over 75% of the total mentha oil stock available for delivery on the exchange, funded by NEFM.

Subsequently, in June 2018, MCX submitted their findings to Sebi and conducted a thorough investigation to determine if certain linked entities planned to manipulate the market by taking long positions in mentha oil contracts, thus violating the regulator’s prescribed position limits.

“I find that Noticee 3 to Noticee 21, through a premeditated arrangement and artifice for active concealment of actual beneficiary positions and in violation of position limits as prescribed by the regulator, has deliberately accumulated/ cornered stock of mentha oil through connected notices,” Sebi’s Adjudicating Officer Vijayant Kumar Verma said in the order.

Verma added that the notices played the role of conduit and assisted the NEFM to take an influential beneficiary position in mentha oil contracts through unfair means and misuse of the exchange mechanism.

“I find that by actively concealing ultimate beneficial ownership of mentha oil stock so acquired, notices have created the false and misleading appearance of trades wherein trades were done/funded by notices without disclosing their connection,” he added.

Therefore, the notices have violated the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms.

The market regulator also mentioned the active role of R K Commodities Services (RCS) as a trading member which executed trades of notices and channeled funds through its connected entities i.e Rapid Credit & Holdings (Rapid) and Invictus Stock Research (Invictus).

The order added that by not following due diligence RCS also played a role in cornering the mentha oil future contract, thereby violating stock brokers’ regulations.

(With inputs from PTI)