The Securities and Exchange Board of India (SEBI) has imposed a fine of Rs. 5 lakh on Chandra Lakshmi Safety Glass Limited for engaging in manipulative and deceptive trading in illiquid stock options.
The order, dated May 16, 2023, found that Chandra Lakshmi Safety Glass had indulged in a number of activities that were designed to create artificial volume and price movement in illiquid stock options. These activities included:
- Reversing trades shortly after execution
- Placing orders that were unlikely to be executed
- Trading in illiquid stock options with the intent to manipulate prices
SEBI found that these activities had created a false and misleading impression of market activity in illiquid stock options. This had the potential to mislead investors and affect the orderly functioning of the market.
As a result of these findings, SEBI has imposed a fine of Rs. 5 lakh on Chandra Lakshmi Safety Glass and ordered the company to cease and desist from engaging in such manipulative and deceptive trading.
SEBI’s action against Chandra Lakshmi Safety Glass is a reminder that the regulator is committed to protecting investors from fraudulent and manipulative trading practices. Investors should be aware of the risks associated with illiquid stock options and should only trade in these instruments with caution.
Here are some additional details about the case:
- SEBI’s investigation into Chandra Lakshmi Safety Glass’s trading activities was initiated in 2015.
- The investigation found that Chandra Lakshmi Safety Glass had engaged in manipulative and deceptive trading in illiquid stock options for a period of over one year.
- SEBI’s order against Chandra Lakshmi Safety Glass is the latest in a series of actions taken by the regulator to crack down on fraudulent and manipulative trading practices.
- Investors should be aware of the risks associated with illiquid stock options and should only trade in these instruments with caution.
In addition to the headline and article above, here are some additional information about the risks of illiquid stock options:
- Illiquid stock options are those that have low trading volume. This means that there are fewer buyers and sellers in the market, which can make it difficult to buy or sell these options at a fair price. Additionally, illiquid stock options are more susceptible to manipulation by unscrupulous traders.
- Some of the risks associated with illiquid stock options include:
- The risk of not being able to sell the options at a fair price
- The risk of the options being manipulated by unscrupulous traders
- The risk of losing money on the options
Investors should be aware of these risks before trading in illiquid stock options.
