Illiquid Stock Options: SEBI Slaps Rs40 Lakh Penalty on 8
Moneylife Digital Team 21 March 2025
Market regulator Securities and Exchange Board of India (SEBI) has imposed penalties of Rs40 lakh on eight entities found guilty of engaging in non-genuine trading activities within the illiquid stock options segment of the Bombay Stock Exchange (BSE). Each implicated entity has been fined Rs5 lakh for participating in these fraudulent activities.
 
The entities penalised by SEBI are Sanjoy Kumar Gupta and Family, Utkal Automotive Pvt Ltd, Meenu Ajmera, Viswaroop Marketing Pvt Ltd, Nisha Pandey, Manish Kumar Kanodia Hindu undivided family (HUF), Advent Commosales Pvt Ltd and Mrinal Verma.
 
In eight separate orders, Asha Shetty, adjudicating officer (AO) of SEBI, articulated that the trading behaviour of two of the entities confirmed that such trades were not regular, indicating that the trades executed by these four created an appearance of artificial trading volumes in respective contracts in violation of Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a) of PFUTP Regulations, 2003.
 
SEBI's investigation into these trading activities spanned from 1 April 2014 to 30 September 2015. SEBI discovered that a staggering 291,744 trades, accounting for about 81.41% of all trades executed in the stock options segment, were potentially non-genuine. This alarming statistic underscores how these activities distorted the market by creating artificial volumes, the market regulator says.
 
SEBI has stated that Meenu Ajmera, Viswaroop Marketing, Nisha Pandey, Manish Kumar Kanodia HUF, Advent Commosales and Mrinal Verma each executed two trades. Sanjoy Kumar Gupta and his family executed three trades, while Utkal Automotive executed three.
 
These eight entities executed trades characterised by reversal trades which, typically, involve buying and selling the same securities almost simultaneously to create an illusion of heightened trading activity, SEBI says, adding, "Such practices not only mislead other market participants but also undermine the fairness and transparency of the trading environment."
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