Description

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

Summary

SEBI issued Adjudication Order No. Order/JS/RJ/2025-26/31948 against Rajesh Kapoor (PAN: AAJPK2039A) for engaging in non-genuine reversal trades in illiquid stock options on BSE during April 1, 2014 to September 30, 2015. The investigation revealed that 81.40% of all trades (2,91,744 trades) in BSE’s stock options segment involved reversal of buy and sell positions creating artificial volumes. Rajesh Kapoor was one of 14,720 entities found executing such manipulative trades that lacked trading rationale and created false or misleading appearance of trading.

Key Points

  • Investigation period: April 1, 2014 to September 30, 2015
  • 2,91,744 reversal trades identified comprising 81.40% of all stock options trades on BSE
  • Reversal trades involved entities reversing buy/sell positions with same counterparty
  • 14,720 entities total found executing non-genuine trades
  • Rajesh Kapoor charged with violations of PFUTP Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a)
  • Trades deemed manipulative and deceptive, creating artificial volumes
  • Case transferred to new Adjudicating Officer on April 4, 2025

Regulatory Changes

No new regulatory changes. This order enforces existing SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003.

Compliance Requirements

  • Market participants must avoid reversal trades that lack genuine trading rationale
  • Entities must not create artificial volumes or false/misleading appearance of trading
  • Trading activities must comply with PFUTP Regulations prohibiting manipulative and deceptive practices

Important Dates

  • Investigation Period: April 1, 2014 to September 30, 2015
  • Adjudicating Officer Appointment: April 4, 2025
  • Show Cause Notice: Issued by erstwhile AO (specific date not mentioned in excerpt)

Impact Assessment

This is an individual enforcement action with minimal market-wide impact. The order addresses historical violations from 2014-2015 involving one entity among thousands identified in a systemic investigation of illiquid stock options manipulation on BSE. The case demonstrates SEBI’s continued efforts to pursue individual violators from past market manipulation schemes. Impact is limited to the specific noticee and serves as a deterrent signal to market participants against engaging in non-genuine trades that create artificial volumes.

Impact Justification

Individual adjudication order for historical violations (2014-2015) with limited market-wide impact. Affects only one entity among 14,720 violators identified in the investigation.