Description

SEBI imposed penalty on Tavarya Trade-Link Private Limited for executing non-genuine reversal trades in illiquid stock options at BSE during April 2014 to September 2015, creating artificial volume.

Summary

SEBI’s Adjudication Officer issued Order No. Order/AK/GN/2025-26/31820 against Tavarya Trade-Link Private Limited (PAN: AACCT5851H) for violations of PFUTP Regulations. The entity was found guilty of executing non-genuine reversal trades in illiquid stock options at BSE during the investigation period from April 1, 2014 to September 30, 2015. The entity executed 6 non-genuine trades across 3 stock option contracts, creating artificial volume of 5,52,500 units. This was part of a larger manipulation scheme where 2,91,744 trades (81.40% of all trades in stock options segment) were identified as non-genuine.

Key Points

  • Tavarya Trade-Link Private Limited executed 6 non-genuine reversal trades in 3 stock option contracts at BSE
  • Total artificial volume created: 5,52,500 units
  • Investigation period: April 1, 2014 to September 30, 2015
  • Overall, 2,91,744 trades comprising 81.40% of all trades in BSE stock options segment were identified as non-genuine during the investigation period
  • 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 (Reference: EAD-10/SM/AE/35225/2022)
  • Original AO Ms. Soma Majumder appointed on June 21, 2021
  • Case transferred to new AO on April 03, 2025

Regulatory Changes

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

Compliance Requirements

  • Market participants must refrain from executing non-genuine or reversal trades that create artificial volume
  • Trades in illiquid stock options must be genuine and not manipulative in nature
  • Entities must ensure trading activities do not create false or misleading appearance of trading volumes
  • Market participants must comply with PFUTP Regulations to avoid fraudulent and unfair trade practices

Important Dates

  • Investigation Period: April 1, 2014 to September 30, 2015
  • AO Appointment (Original): June 21, 2021
  • Communication of Appointment: July 27, 2021
  • Show Cause Notice Date: August 04, 2022
  • Transfer to New AO: April 03, 2025
  • Adjudication Order Number: Order/AK/GN/2025-26/31820

Impact Assessment

Market Impact: This order is part of SEBI’s broader crackdown on manipulation in illiquid stock options segment at BSE. The fact that over 81% of trades were non-genuine indicates systemic manipulation that undermined market integrity during 2014-2015.

Operational Impact: Limited current operational impact as the violations occurred during 2014-2015. However, this enforcement action serves as a deterrent for similar manipulative practices.

Entity Impact: Tavarya Trade-Link Private Limited faces adjudication proceedings and potential penalties under Section 15HA of SEBI Act for creating artificial volume through reversal trades.

Precedent Value: Reinforces SEBI’s zero-tolerance approach to market manipulation, particularly in illiquid segments where price discovery can be easily distorted through coordinated trading activities.

Impact Justification

Enforcement action against market manipulation in illiquid stock options segment. Medium impact as it involves historical violations (2014-2015) and a single entity, but high severity due to fraudulent trading practices.