Description

SEBI adjudication order imposing penalty on Pranab Nandy for engaging in non-genuine reversal trades in illiquid stock options at BSE, creating artificial volumes during April 2014 to September 2015.

Summary

SEBI has issued an adjudication order against Pranab Nandy (PAN: ACLPN0680J) for engaging in non-genuine reversal trades in illiquid stock options at BSE during April 1, 2014 to September 30, 2015. The investigation revealed that 2,91,744 trades comprising 81.40% of all trades in BSE’s stock options segment during this period were non-genuine, creating artificial volumes. The Noticee was found to have violated SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003.

Key Points

  • Pranab Nandy executed reversal trades in illiquid stock options at BSE during the investigation period (April 1, 2014 to September 30, 2015)
  • 2,91,744 trades representing 81.40% of all stock options trades at BSE during the period were identified as non-genuine
  • These trades created artificial volumes and false or misleading appearance of trading in stock options
  • Violations alleged under Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a) of PFUTP Regulations, 2003
  • Show Cause Notice issued on August 04, 2022
  • Adjudicating Officer initially appointed on March 11, 2022; current officer appointed April 03, 2025
  • Proceedings conducted under Section 15-I of SEBI Act, 1992 and SEBI Adjudication Rules, 1995

Regulatory Changes

No new regulatory changes introduced. This order enforces existing SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003.

Compliance Requirements

  • Market participants must refrain from executing reversal trades or non-genuine trades that create artificial volumes
  • Trading activities must not create false or misleading appearance of trading
  • Stock options trading must comply with PFUTP Regulations prohibiting manipulative and deceptive practices
  • Brokers and traders should implement controls to prevent execution of synchronized or circular trades

Important Dates

  • Investigation Period: April 1, 2014 to September 30, 2015
  • Adjudicating Officer Appointment: March 11, 2022 (initial); April 03, 2025 (current officer)
  • Show Cause Notice Issued: August 04, 2022
  • Adjudication Order Number: Order/AK/RK/2025-26/31783

Impact Assessment

Market Impact: Limited direct market impact as the violations occurred during 2014-2015 and involve a single individual entity. However, the order demonstrates SEBI’s continued enforcement against historical market manipulation cases.

Regulatory Significance: Reinforces SEBI’s zero-tolerance approach toward artificial volume creation and manipulative trading practices in derivatives segments, particularly in illiquid stock options where such practices can significantly distort price discovery.

Operational Impact: Serves as a deterrent for market participants engaging in reversal trades or synchronized trading that creates false appearance of market activity. Highlights the importance of genuine trading intent and proper surveillance mechanisms at exchanges.

Impact Justification

Individual adjudication order for historical violations (2014-2015) with limited market-wide impact, but demonstrates SEBI's enforcement against manipulative trading practices in illiquid stock options