Stock Price Manipulation: SEBI Imposes Rs10 Lakh Penalty on ARG Management Solutions

Moneylife Digital Team 29 September 2022

Market regulator Securities and Exchange Board of India (SEBI) has levied a penalty of Rs10 lakh on ARG Management Solutions Pvt Ltd for indulging in manipulation of the share prices of Nutraplus India Ltd.

The order came after the market regulator conducted an investigation into the scrip of Nutraplus India to ascertain any violations of Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) norms by certain entities for the period January 2015 to July 2017.

Pursuant to its probe, the regulator found that certain entities, including the ARG Management Solutions (noticee), had allegedly indulged in manipulation in the price and creation of a misleading appearance of trading in the scrip.

In addition, the noticee had significantly contributed to a rise in the scrip price of NIL and created a misleading appearance of trading in the scrip by placing buy orders for minuscule quantity (single share) on 4,000 instances. It had contributed to positive last traded price (LTP) by Rs4,228.90 through those trades to the positive LTP during the period from January 2015 to February 2016, thereby violating the PFUTP rules.

Thereafter, a common show cause notice dated 14 February 2020 was issued by SEBI to the noticee and the other entities for the violations.

Subsequently, an order was passed by SEBI's adjudicating officer (AO) dated March 31 2020, wherein the regulator concluded that the charges against the noticee in the show cause notice were not established.

Consequently, SEBI's AO disposed of the show cause notice against the noticee without any penalty.

However, SEBI observed that the AO order in not holding the noticee was erroneous and not in the interest of the securities markets and thereafter, issued another show cause notice to ARG Management Solutions on 29 April 2020.

"I find that by executing 4,000 buy trades of single share each at incremental prices, which had positively contributed to the total rise in the LTP by Rs4,228.90, the noticee manipulated the price of the scrip and created a misleading appearance of trading in the stock prices of NIL," SEBI's whole time member (WTM) Ashwani Bhatia said. By executing such trades, the noticee has violated the provisions of PFUTP rules.

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