SEBI Fines 23 Entities for Disregarding Trading Norms for Rs 1.55 crore

The Multi Commodity Exchange’s mentha oil futures contracts were subject to regulatory trading rules violations. On Friday, the Securities and Exchange Board of India (SEBI) fined 23 companies a total of 1.55 crore for the violations. Fines levied by the market authority range from one lakh to ten lakh rupees.

The order came after MCX informed SEBI of its observation about connections between certain organizations with North End Foods Marketing (NEFM). Additionally, they were holding more than 75% of the total mentha oil accessible for delivery on the exchange that was funded by NEFM.

MCX submitted its findings to SEBI in June 2018. It also conducted a thorough investigation in order to see if any linked entities intended to manipulate the market by taking long positions in mentha oil contracts, which would have violated the regulators’ established position limits.

While speaking in its order. Vijayant Kumar Verma, SEBI’s Adjudication Officer said, “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.”

Verma further mentioned that by using unfair methods and abusing the exchange mechanism, the notices served as a conduit and helped the NEFM assume a powerful beneficiary position in the contracts for mentha oil.

“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.

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

In addition to the aforementioned, the market regulator noted R K Commodities Services’ (RCS’) active involvement as a trading participant, which included the execution of notice trades. It also mentioned the channelling of funds through its affiliated companies Rapid Credit & Holdings (Rapid) and Invictus Stock Research. (Invictus).

The ruling further stated that RCS had violated the rules governing stock brokers by failing to exercise due diligence and contributing to the cornering of the mentha oil future contract.

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