Description

SEBI imposes adjudication order against Kusum Devi Agarwal for alleged violations related to non-genuine reversal trades in Illiquid Stock Options on BSE during April 2014 to September 2015.

Summary

SEBI has issued Adjudication Order No. Order/JS/VC/2025-26/31796 against Kusum Devi Agarwal (PAN: AFBPA5176P) under Section 15-I of the SEBI Act, 1992 for alleged violations of PFUTP Regulations. The order relates to her involvement in non-genuine reversal trades in Illiquid Stock Options (ISO) on BSE during the investigation period from April 1, 2014 to September 30, 2015. The trades allegedly created false or misleading appearance of trading through artificial volume creation.

Key Points

  • SEBI investigated large-scale reversal of trades in Illiquid Stock Options on BSE leading to artificial volume creation
  • Investigation period: April 1, 2014 to September 30, 2015
  • Total 2,91,744 trades (81.40% of all trades in stock options segment) involved reversal of buy/sell positions
  • 14,720 entities were found to have executed non-genuine trades during the investigation period
  • Kusum Devi Agarwal was one of the entities who executed reversal trades with same counterparty
  • Trades allegedly lacked basic trading rationale and were manipulative and deceptive in nature
  • Show Cause Notice dated August 26, 2021 was issued to the Noticee
  • Adjudicating Officer appointed on April 4, 2025 to conduct inquiry

Regulatory Changes

No new regulatory changes. This is an enforcement action applying existing PFUTP Regulations.

Compliance Requirements

  • Market participants must ensure trades have genuine trading rationale
  • Avoid reversal trades that create artificial volume or false appearance of trading
  • Comply with regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a) of PFUTP Regulations
  • Prohibition of fraudulent and unfair trade practices in securities market

Important Dates

  • Investigation Period: April 1, 2014 to September 30, 2015
  • Show Cause Notice issued: August 26, 2021
  • Adjudicating Officer appointed: April 4, 2025
  • Order Date: November 21, 2025

Impact Assessment

Market Impact: Low - Individual enforcement action with no broader market implications

Operational Impact: Low - Historical case involving one individual trader’s activities from 2014-2015

Regulatory Significance: This order demonstrates SEBI’s continued enforcement against market manipulation practices, particularly in illiquid derivatives segments. It reinforces the prohibition against creating artificial volumes through non-genuine reversal trades. However, as an individual adjudication order for historical violations, it has limited current market-wide impact.

Impact Justification

Individual adjudication order with limited market-wide impact. Relates to historical trading violations from 2014-2015. No systemic regulatory changes or broad market implications.