Manipulative trading in an illiquid scrip was found fraudulent, with repetitive order placement and deletion supporting penalty.

Repeated buy orders placed above the last traded price in an illiquid scrip, followed by deletion of unexecuted quantities, were found to have artificially pushed prices upward and created a misleading appearance of liquidity and market interest. SEBI treated the trading pattern as manipulative and fraudulent conduct within the PFUTP Regulations, with the repeated nature of the trades and their market impact supporting the finding. On penalty, the conduct was held liable to monetary sanction under the SEBI Act, with repetitive default and market effect considered in the assessment.

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Issues: Whether the noticees indulged in fraudulent and manipulative trading in the scrip, thereby violating the PFUTP Regulations, and whether monetary penalty under the SEBI Act was warranted.

Analysis: The trading pattern showed repeated purchase orders placed above the last traded price in an illiquid scrip, often when no sell order was available, followed by deletion of the remaining buy quantity after a partial match. The order and trade logs showed that this conduct repeatedly pushed the price upward and created a misleading appearance of liquidity and market interest. The noticees' contribution to the positive last traded price was substantial in the context of the low-volume scrip, and the conduct was held to be manipulative and fraudulent within the meaning of the PFUTP Regulations. For penalty, the adjudicating authority applied the statutory penalty provision for fraudulent and unfair trade practices and considered the factors of repetitive default and market impact under the penalty-assessment provision.

Conclusion: The noticees were found to have violated the PFUTP Regulations and were liable to monetary penalty under the SEBI Act.

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