Sebi has imposed a penalty of Rs 7.5 lakh on Gold View Financial Services Ltd for indulging in fraudulent trading in illiquid stock options on the BSE. After observing large-scale reversal of trades in the illiquid stock options segment, the regulator conducted a probe between April 2014 and September 2015.
It was revealed that over 81 per cent of all the trades executed in the segment involved reversal of buy and sell positions by clients and counter-parties, that resulted in generation of artificial volumes.
According to Sebi, Gold View had indulged in 102 reversal trades in 37 unique contracts which led to generation of 1,41,24,316 units in artificial volumes.
These artificial volumes contributed significantly to the extent of 6 per cent to 100 per cent of the total volume in the said contracts in the market, the regulator said in an order dated February 24.
Trades carried out by the company were non-genuine in nature and created a misleading appearance of trading in the illiquid stock options contracts, where there was negligible participation by the public, as per Sebi.
The watchdog has penalised the company as it violated PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) regulation
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