Description

SEBI adjudication order imposing penalty on Riju Rajpal HUF for executing non-genuine reversal trades in illiquid stock options on BSE during April 2014 to September 2015, violating PFUTP regulations.

Summary

SEBI has issued Adjudication Order No. Order/JS/RJ/2025-26/31954 against Riju Rajpal HUF (PAN: AALHR9308B) for executing non-genuine reversal trades in illiquid stock options on BSE during the investigation period from April 1, 2014 to September 30, 2015. The entity was found to have engaged in manipulative trading practices that created false or misleading appearance of trading through artificial volumes. The order was issued under Section 15-I of the SEBI Act, 1992 read with Rule 5 of SEBI (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995.

Key Points

  • Investigation revealed 2,91,744 reversal trades constituting 81.40% of all trades executed in BSE’s stock options segment during the investigation period
  • 14,720 entities were found to have executed non-genuine trades in BSE’s stock options segment
  • Riju Rajpal HUF executed reversal trades where buy/sell positions were reversed with the same counterparty in a contract
  • Such reversal trades lacked basic trading rationale and created artificial volume
  • The trades were alleged to be deceptive and manipulative in nature
  • Show Cause Notice dated October 25, 2021 was issued to the Noticee
  • Undersigned was appointed as Adjudicating Officer on April 04, 2025 following transfer from erstwhile AO

Regulatory Changes

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

Compliance Requirements

  • Entities must avoid executing reversal trades that lack genuine trading rationale
  • Market participants must not engage in trades that create false or misleading appearance of trading activity
  • Trading activities must not be structured to generate artificial volumes in illiquid contracts
  • Compliance with regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a) of PFUTP Regulations is mandatory

Important Dates

  • Investigation Period: April 1, 2014 to September 30, 2015
  • Show Cause Notice issued: October 25, 2021
  • AO appointment (current): April 04, 2025
  • Order date: January 2026

Impact Assessment

This is an individual enforcement action against a single HUF entity that was part of a larger investigation involving 14,720 entities. The impact is limited to the specific noticee and serves as a deterrent for manipulative trading practices in illiquid stock options. The order demonstrates SEBI’s continued efforts to address historical market manipulation cases and maintain market integrity. Given the time lag between the violations (2014-2015) and the adjudication order (2026), the immediate market impact is minimal, though it reinforces regulatory vigilance in monitoring illiquid segments for artificial volume creation.

Impact Justification

Individual entity adjudication order for historical manipulation (2014-2015) with limited market-wide impact; enforcement action against single HUF entity among 14,720 entities involved