Description

SEBI imposes penalty on Mohammed Moinul Haque for executing non-genuine reversal trades in illiquid stock options on BSE during April 2014 to September 2015, creating artificial volumes.

Summary

SEBI issued an adjudication order (Order/JS/DP/2025-26/31891) against Mohammed Moinul Haque (PAN: AASPH2967H) for executing non-genuine reversal trades in illiquid stock options on BSE during April 1, 2014 to September 30, 2015. The investigation revealed that 2,91,643 trades comprising 81.38% of all trades in BSE’s stock options segment were reversal trades involving entities reversing their buy/sell positions with the same counterparty. These trades created artificial volumes and false appearance of trading activity. Mohammed Moinul Haque was among 14,720 entities identified for such violations and was charged with violating SEBI PFUTP Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a).

Key Points

  • Investigation period covered April 1, 2014 to September 30, 2015
  • Total 2,91,643 reversal trades constituted 81.38% of all stock options trades on BSE
  • 14,720 entities identified for executing non-genuine trades
  • Mohammed Moinul Haque executed reversal trades lacking basic trading rationale
  • Trades created false or misleading appearance of trading through artificial volumes
  • Show Cause Notice issued on December 24, 2021
  • Adjudicating Officer appointed on April 04, 2025
  • Charged with violations of PFUTP Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a)

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

This order serves as a warning to market participants against:

  • Executing reversal trades with same counterparties in illiquid stock options
  • Creating artificial volumes through non-genuine trades
  • Engaging in manipulative and deceptive trading practices
  • Creating false or misleading appearance of trading activity

Important Dates

  • Investigation Period: April 1, 2014 to September 30, 2015
  • Show Cause Notice: December 24, 2021
  • Adjudicating Officer Appointment: April 04, 2025
  • Order Date: December 19, 2025

Impact Assessment

This is an individual enforcement case with limited market-wide impact. The order addresses historical violations from 2014-2015 in illiquid stock options segment on BSE. While the practice affected 81.38% of trades in that segment during the investigation period, the trading was in illiquid options with minimal broader market impact. The case is part of SEBI’s systematic action against 14,720 entities involved in similar manipulation, demonstrating regulatory vigilance in detecting and penalizing artificial volume creation. Impact is primarily deterrent in nature for similar future violations.

Impact Justification

Individual penalty case for historical manipulation (2014-2015) with no broader market impact or new regulatory requirements