Market regulator Sebi has imposed a penalty of Rs 22 lakh on three entities for circular trading in the scrip of Rich Capital & Financial Services in 2009.

Sebi has imposed a fine of Rs 7 lakh each on Sanjeev Agarwal and Ashesh Agarwal and another Rs 8 lakh on the brokerage firm, Big Broker House Stocks, for circular trading in the scrip of Rich Capital & Financial Services Ltd (RCFL) between March 27, 2009 to August 12, 2009, it said in a circular issued today.

The trading in the scrip of the company, which was listed on the BSE, was investigated due to sharp price rise and trading in heavy volumes in the scrip during the investigation period.

During the investigation period, it was observed that the price of the scrip opened at Rs 8.90 on March 27, 2009 and moved to a high of 80.15 on August 12, 2009 and closed at 73.70 on August 12, 2009 with an average volume of 5,258 shares per day.

"The investigation observed that a group of connecteda /related clients entered into transactions with each other and executed synchronised trades and circular/ reversal trades and created artificial volume. Further these connected clients also executed trades at a price higher than last traded price (LTP) and contributed to new high price and thus created artificial price rise in the scrip," Sebi said.

It was alleged that these three entities "contributed to new high price, entered into trades at a higher price than the last traded price in the scrip and also executed reversal /circular trades thereby created artificial volumes in the scrip of RCFL and manipulated the price of the scrip which led to manipulative, fraudulent and unfair trade in the scrip during the investigation period."

Sebi said that Sanjeev Agarwal had traded through the broker MTL Shares & Stock ltd, while Ashesh Agarwal had executed via the trading member UPSE Securities Ltd and Big Brokers House Stocks Ltd had exchanged hands through the trading member MTL Shares & Stock ltd. (PTI)