SEBI Slaps ₹1.89 Crore Penalty on 7 Entities for Rigged Trades in Illiquid Stock Options

Moneylife Digital Team 02 February 2026

Investor Interest

In a strong regulatory rebuke of market manipulation, Securities and Exchange Board of India (SEBI) has imposed a total penalty of ₹1.89 crore on seven entities for executing non-genuine and circular trades in the illiquid stock options segment of the National Stock Exchange (NSE). This case, once again, exposes how thinly-traded derivatives contracts are being misused to create artificial volumes.

The penalised entities include MVM Securities Pvt Ltd, MVM Commodities Pvt Ltd, Govinda Shares & Securities Pvt Ltd, Navin Textiles Marketing Pvt Ltd, Sureshkumar Khimajibhai Doshi, Epoch Synthetics Pvt Ltd and Trinetra Company Pvt Ltd.

The penalties arise from an SEBI investigation into three-way reversals in out-of-the-money stock options during February to March 2021. The regulator found that the entities had repeatedly entered into pre-arranged trades that merely passed positions among themselves, with no genuine transfer of risk or ownership. Such trades, SEBI noted, served no economic purpose other than to manufacture trading volumes and mislead the market.

SEBI’s order records that the trades were executed in a tightly coordinated manner, often within seconds, across multiple contracts, leaving little doubt that the transactions were circular and non-genuine. The regulator rejected claims that the trades were independent or coincidental, stating that the frequency, timing and repetitive nature of the transactions pointed clearly to deliberate manipulation.

While SEBI noted that investor losses could not be precisely quantified, it underscored that such trading practices strike at the very foundation of market integrity. Illiquid stock options, as observed, are particularly vulnerable to manipulation and artificial volume creation in such contracts can mislead unsuspecting investors into believing there is genuine liquidity or price discovery.

Importantly, SEBI warned that leniency in cases involving fraudulent and unfair trade practices could seriously undermine confidence in the securities market. The adjudicating officer stressed that circular trading is one of the easiest ways to rig volumes and that regulatory action is necessary to deter similar misconduct in the derivatives segment.

At the centre of the case is MVM Securities, which was slapped with the highest penalty of ₹49 lakh, followed by ₹44 lakh on Sureshkumar Khimajibhai Doshi. SEBI also imposed penalties of ₹30 lakh on Epoch Synthetics, ₹24 lakh on Navin Textiles Marketing, ₹16 lakh on Trinetra Company, ₹15 lakh on Govinda Shares & Securities and ₹11 lakh on MVM Commodities.

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