Markets regulator Sebi has slapped a fine totalling Rs 15 lakh on three entities for executing fraudulent trades, which created artificial volume in the illiquid stock option segment on the BSE.
The regulator has levied a fine of Rs 5 lakh each on Positiveview Commercial, Oscar Infra, and Pravinchandra Gagaldas Sanghvi, according to Sebi orders.
The regulator conducted an investigation into the trading activities of certain entities in illiquid stock options at the BSE from April 2014 to September 2015, after observing large-scale reversal of trades in the bourse’s stock options segment.
The probe found that these entities had bought and sold option contracts with the same counter parties and also reversed its trades in less than few minutes from its earlier buy or sell trades, at substantial price difference.
Such pattern of dealings suggests beyond doubt that they were not driven by market factors as none of the parameters (underlying stock price, volatility, among others) for option pricing have undergone any change, according to the orders.
“Trades of noticee (the three entities) were non-genuine and have created false or misleading appearance of trading in terms of artificial volume in stock options and therefore manipulative, deceptive in nature,” the Securities and Exchange Board of India (Sebi) said in similar-worded orders.