The orders came after the Securities and Exchange Board of India (Sebi) observed large-scale reversal of trades in the illiquid stock options segment of BSE, leading to the creation of artificial volume.
Thereafter, the markets watchdog conducted an investigation into the trading activities of certain entities in illiquid stock options on BSE for the period April 2014 to September 2015.
According to Sebi, reversal trades are the trades in which an entity reverses its buy or sell positions in a contract with subsequent sell or buy positions with the same counterparty.
The reversal trades are alleged to be non-genuine trades as they lack basic trading rationale and allegedly lead to a false or misleading appearance of trading, leading to the generation of artificial volume, the regulator said in the order.
“The trading behaviour of the noticee (seven entities) confirms that such trades were not normal, indicating that the trades executed…were not genuine trades and being non-genuine, created an appearance of artificial trading volumes in respective contract,” Sebi said. Accordingly, these seven entities flouted the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms stand established, it added. In a separate order, the regulator levied a penalty of Rs 10 lakh on Nikhil Dayanand Baljekar (a Sebi-registered research analyst) for violating market norms.
The order came after Sebi conducted an inspection of books of accounts in respect of Nikhil Dayanand Baljekar.
The period of inspection was from April 2022 to January 2024. The inspections were conducted to check whether the research analyst (RA) and its associates/employees have promised and/ or are promising any assured returns to the investors and maintenance of records by the RA.
In another order on Tuesday, Sebi imposed a fine of Rs 4 lakh on Basant Maheshwari Wealth Advisers LLP (BMWAL) for flouting regulatory norms.
