Description

SEBI adjudication order imposing penalty on Aditya Dhabria for executing non-genuine reversal trades in illiquid stock options on BSE during April 2014 to September 2015.

Summary

SEBI has issued an adjudication order against Aditya Dhabria (PAN: AGHPD0399N) for engaging in non-genuine reversal trades in illiquid stock options on BSE during the investigation period from April 1, 2014 to September 30, 2015. The investigation revealed large-scale reversal of trades creating artificial volumes, with 2,91,643 trades (81.38% of all trades) in the stock options segment being non-genuine. Aditya Dhabria was identified as one of 14,720 entities who executed such manipulative trades that lacked trading rationale and created false or misleading appearance of trading.

Key Points

  • Investigation covered trading activities in illiquid stock options on BSE from April 1, 2014 to September 30, 2015
  • 2,91,643 reversal trades identified, representing 81.38% of all trades executed in BSE stock options segment during the period
  • Total of 14,720 entities found involved in executing non-genuine trades
  • Aditya Dhabria executed reversal trades where buy/sell positions were reversed with the same counterparty
  • Such trades lacked basic trading rationale and created artificial volume
  • Alleged violations of PFUTP Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a)
  • Show Cause Notice issued on September 30, 2021
  • Adjudicating Officer appointed on April 4, 2025 under Section 15-I of SEBI Act, 1992

Regulatory Changes

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

Compliance Requirements

  • Market participants must ensure all trades have genuine trading rationale and economic purpose
  • Reversal trades with same counterparty that create artificial volumes are prohibited
  • Entities must avoid trading practices that create false or misleading appearance of trading activity
  • Trading in illiquid stock options must comply with market integrity standards

Important Dates

  • Investigation Period: April 1, 2014 to September 30, 2015
  • Show Cause Notice: September 30, 2021
  • Adjudicating Officer Appointment: April 4, 2025
  • Order Number: Order/JS/YK/2025-26/31836

Impact Assessment

This adjudication order is part of SEBI’s systematic enforcement action against a widespread manipulation scheme in BSE’s illiquid stock options segment. With 14,720 entities involved and over 81% of trades being non-genuine, this represents a significant market integrity issue from 2014-2015. The enforcement action, though delayed, demonstrates SEBI’s commitment to pursuing manipulative practices even in less liquid market segments. Individual traders and brokers should note that reversal trades lacking economic rationale will attract regulatory action and penalties under PFUTP regulations. The case establishes precedent for identifying and penalizing pattern-based manipulation through artificial volume creation.

Impact Justification

Individual enforcement action for historical market manipulation in illiquid stock options segment. Part of larger investigation involving 14,720 entities. Demonstrates SEBI's continued action against non-genuine trading practices.