Gitanjali Gems under SEBI's scanner for malpractices

The Securities and Exchange Board of India (SEBI) has ordered investigation into suspected manipulative trading in the stock of Gitanjali Gems. The market regulator has directed to complete the investigation within six months from the date of the order.

SEBI has issued a show cause notice to promoter, Mehul Choksi and 22 other entities, all of whom have failed to comply with the position limits set by the market regulator in the derivatives segment.

These entities had taken open positions ranging from 32.91 per cent to 55.65 per cent  of market vide position limit, surpassing the limit of 5 per cent of open interest in the derivatives contract of a particular underlying stock, thereby violating SEBI's rules.

As per SEBI’s show cause notice, the share price has witnessed substantial volume in the period of July 18, 2011 and January 25, 2012. The volume in the stock has been created by the alleged entities related to the Choksi Group.

The share price of Gitanjali Gems declined by 2.46 per cent and closed at Rs 63.35 on Friday. The stock has been doubled in last one year period from Rs 32 to Rs 63.35 till date.