Ruchi Soya Share Manipulation: After 10 Years, SEBI Slaps Rs25 Lakh Penalty on 9 for Fraudulent Trade Practices
Moneylife Digital Team 03 May 2022
Nine entities in the scrip of Ruchi Soya Industries Ltd, that were found indulging in fraudulent trade practices about 10 years ago, have been slapped with a total penalty of Rs25 lakh by market regulator Securities and Exchange Board of India (SEBI). Last year, SEBI's whole-time member (WTM) had directed these entities to disgorge Rs5.76 crore with an interest at the rate of 12% per annum from 28 September 2012 till the date of actual payment. Further, these entities were barred from markets between 15th February and 6 December 2013. 
In an order issued last week, Vijayant Kumar Verma, adjudicating officer (AO) of SEBI says, "By executing manipulative trades, as has been executed by the noticees in the instant matter, the price discovery system itself is affected. It also has an adverse impact on the fairness, integrity and transparency of the stock market. I have also taken into account the fact that the noticees had traded in a specific pattern and their contribution in manipulation in the scrip. In view of the same, I am inclined to consider that the noticees are responsible for the aforesaid violations and therefore, I impose an appropriate penalty on the noticees."
The group of nine entities named in the SEBI order are: Aventis Biofeeds Pvt Ltd (amalgamated with Immix Trade Pvt Ltd), Navinya Multitrade Pvt Ltd, Uni24 TechnoSolutions Pvt Ltd, Sunmate Trade Pvt Ltd, Shreyans Credit and Capital Pvt Ltd, Betul Oils and Feeds Pvt Ltd, Betul Minerals and Constructions Pvt Ltd, Vision Millenium Exports Pvt Ltd (amalgamated with Moebius Credit and Capital Pvt Ltd), and Moebius Credit and Capital, who traded in the shares of Ruchi Soya and manipulated the share price.
According to SEBI, Aventis Biofeeds, Navinya Multitrade, Uni24 TechnoSolutions, Sunmate Trade, Shreyans Credit and Capital, Vision Millenium Exports and Moebius Credit and Capital fraudulently traded and contributed to price rise in the scrip of Ruchi Soya during the last 30 minutes of trading at the National Stock Exchange (NSE) on 27 September 2012.
"Through this manipulation, the noticees managed to artificially establish higher settlement price in the futures of Ruchi Soya on 27 September 2012, which finally closed at Rs78.65. The aforesaid scheme of 'marking the close' devised by the noticees enabled noticee Nos1 to 7, who were holding long positions in the Ruchi Soya futures on 27 September 2012, to reduce their losses arising out of their long positions," it added.
While Betul Oils and Feeds and Betul Minerals and Constructions did not trade in the NSE cash market between 15 and 15:30 hours on that day, SEBI says, these two were part of the group entities who manipulated the price of the scrip in the cash market and benefited from their long positions in the futures market by reducing their losses.
It says, "Betul Oils and Feeds and Betul Minerals and Constructions have submitted that they took delivery of the shares that they purchased on the National Stock Exchange (NSE) cash market and thus, the allegations against them regarding manipulation in the futures contract do not stand established.
"In this regard, I note that it has been established that these noticees executed fraudulent trades on the NSE cash market to enable seven group entities who were holding long positions in Ruchi Soya futures to avoid losses in the NSE futures market.
"Therefore, the submission that these entities took or gave delivery of shares on the cash market, is not a relevant factor in determining the fraudulent nature of their trades, in the facts and circumstances of the present case."
SEBI also found that Aventis Biofeeds, Sunmate Trade, Shreyans Credit and Capital and Moebius Credit and Capital placed buy orders at a price much higher than the prevailing market price in the last half an hour of trading in the scrip of Ruchi Soya in the NSE cash market on 27 September 2012. 
"Since these noticees have not been able to provide any acceptable basis for such trade behaviour, I find that Aventis Biofeeds, Sunmate Trade, Shreyans Credit and Capital and Moebius Credit and Capital placed buy orders at prices higher than the last traded price (LTP) to increase the price of the scrip of Ruchi Soya. The orders were modified to higher prices and the trades were executed mainly during the investigation period, especially, in the last two-three minutes of the trading on 27 September 2012 and thus, they contributed towards the price rise by establishing an artificial higher price in the scrip of Ruchi Soya during the investigation period," the AO says.
3 months ago
Only 10 years! Compliments to SEBI for its admirable speed!!!
3 months ago
financial pains inflicted would be low if seat on the agency is severely contested
3 months ago
Somehow I feel big fraudsters are charged small amounts and where as investors who miss margin by few thousand rupees are fined by %age
Only investors suffer
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