Capital market regulator SEBI on Monday slapped a penalty of Rs. 10 lakh on Jalco Financial Services for fraudulent and unfair trade practices in REI Agro shares.

The Securities and Exchange Board of India (SEB) found that Jalco Financial, along with related entities, indulged in synchronised trades that created artificial volumes in the REI Agro scrip in 2005.

“...it is established beyond doubt that the noticee had executed synchronised and self trades and thereby created false and misleading appearance of trading in the scrip and generated artificial volume,” SEBI said in an order on Monday. Accordingly, the watchdog imposed a penalty of Rs. 10 lakhs on the noticee.

SEBI investigated the alleged irregularity in trading of REI Agro shares for the period from August 9, 2004, to September 16, 2005, wherein wide fluctuations in price and volumes at the BSE and NSE were observed.

The probe found that a group of entities - Jalco Financial Services, Shailaja Finance Ltd (SFL), Signet Suppliers Pvt Ltd (SSPL) and Dwinger Agent (together referred to by SEBI as the ‘Jalco Group’) connected to each other had matched trades among themselves through synchronised orders, which created artificial volumes in REI Agro scrip.

“...it is amply clear that the noticee is connected to the other Jalco group entities and the orders were punched in/placed with a prior arrangement with Dwinger, SFL and SSPL with a solo intention of creating artificial interest and volumes in the scrip,” the market regulator said.

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