Description

SEBI imposed penalty on Tarkeshwar Kaloya for executing non-genuine reversal trades in illiquid stock options on BSE, creating artificial volumes and violating PFUTP Regulations.

Summary

SEBI issued Adjudication Order No. Order/AK/GN/2025-26/31790 against Tarkeshwar Kaloya (PAN: DGDPK0047R) for violations under SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003. The individual executed non-genuine reversal trades in illiquid stock options on BSE during April 1, 2014 to September 30, 2015, creating artificial volumes and false appearance of trading.

Key Points

  • Tarkeshwar Kaloya executed 2 non-genuine trades in 1 stock options contract
  • Total artificial volume created: 2,000 units
  • Investigation period: April 1, 2014 to September 30, 2015
  • Part of larger investigation where 2,91,744 trades (81.40% of all stock options trades on BSE) were found to be non-genuine
  • Show Cause Notice issued on December 8, 2021
  • Alleged violations of Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a) of PFUTP Regulations, 2003

Regulatory Changes

No new regulatory changes. This is an enforcement action under existing SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003.

Compliance Requirements

  • Market participants must not execute reversal trades that create artificial volumes
  • Trading in illiquid stock options must be genuine and not manipulative
  • Traders must not create false or misleading appearance of trading activity
  • All trades must comply with PFUTP Regulations prohibiting fraudulent and deceptive practices

Important Dates

  • Investigation Period: April 1, 2014 to September 30, 2015
  • Adjudicating Officer Appointment: July 6, 2021 (Ms. Sudha Rani R. Thirukonda)
  • Show Cause Notice: December 8, 2021
  • Transfer of Case/New AO Appointment: April 4, 2025
  • Order Date: November 21, 2025

Impact Assessment

Market Impact: Minimal direct market impact as this is a historical enforcement action against an individual trader for violations that occurred over a decade ago. The trades involved were limited in scope (2 trades, 2000 units).

Regulatory Impact: Demonstrates SEBI’s continued enforcement against market manipulation practices in illiquid stock options, even for historical violations. Part of broader crackdown on artificial volume creation on BSE’s stock options segment.

Precedent Value: Reinforces that creation of artificial volumes through reversal trades in illiquid securities constitutes manipulation and will attract penalties, regardless of trade size.

Impact Justification

Individual adjudication order for trading violations during April 2014 to September 2015. Limited market impact as it involves historical trades by single entity with only 2 non-genuine trades in 1 contract totaling 2000 units.