Description

SEBI adjudication order against Decent Contractors Private Limited for executing non-genuine reversal trades in illiquid stock options at BSE, creating artificial volumes during April 2014 to September 2015.

Summary

SEBI issued Adjudication Order No. Order/AK/DS/2025-26/31955 against Decent Contractors Private Limited (PAN: AACCD1614P) for executing non-genuine reversal trades in illiquid stock options at BSE. The investigation covered the period from April 1, 2014 to September 30, 2015, during which 2,91,744 trades comprising 81.40% of all trades in BSE’s stock options segment were identified as non-genuine. The entity is charged with violating SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003, specifically Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a).

Key Points

  • SEBI investigation identified large-scale reversal of trades in BSE stock options segment creating artificial volumes
  • Total 2,91,744 trades (81.40% of all stock options trades) at BSE during investigation period were non-genuine
  • Decent Contractors Private Limited was one of multiple entities involved in executing reversal trades
  • Trades created false or misleading appearance of trading through artificial volumes
  • Entity was incorrectly referred to as “Decent Constructors Private Limited” in initial documentation, though PAN (AACCD1614P) was correct throughout
  • Mr. G Ramar initially appointed as Adjudicating Officer on August 18, 2021; new officer appointed April 3, 2025 following transfer
  • Show Cause Notice issued on August 5, 2022
  • Proceedings conducted under Section 15-I of SEBI Act, 1992 and Rule 5 of SEBI (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995

Regulatory Changes

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

Compliance Requirements

  • Entities must not execute reversal trades that create artificial volumes in stock options
  • Trading activities must not create false or misleading appearance of trading
  • Market participants must avoid manipulative and deceptive trading practices
  • Compliance with Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a) of PFUTP Regulations, 2003 is mandatory

Important Dates

  • Investigation Period: April 1, 2014 to September 30, 2015
  • Initial Adjudicating Officer Appointment: August 18, 2021
  • Show Cause Notice Date: August 5, 2022
  • New Adjudicating Officer Appointment: April 3, 2025
  • Order Date: January 8, 2026

Impact Assessment

This enforcement action demonstrates SEBI’s commitment to preventing market manipulation through artificial volume creation in derivatives segments. The case highlights systemic issues in BSE’s stock options segment during 2014-2015, where over 81% of trades were identified as non-genuine. While the investigation period is historical, the order serves as a deterrent against similar manipulative practices. The lengthy adjudication timeline (from 2021 appointment to 2026 order) reflects the complexity of handling cases involving multiple entities. Market participants trading in illiquid derivatives should ensure their trading patterns do not create misleading impressions of market activity. The action reinforces that coordinated reversal trades designed to inflate volumes will attract regulatory penalties under PFUTP regulations.

Impact Justification

Historical enforcement action against manipulative trading practices in illiquid stock options. Demonstrates SEBI's action against artificial volume creation but limited current market impact as it relates to 2014-2015 period.