Description

SEBI adjudication order imposing penalty on Jigar Rasiklal Patel 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/YK/2025-26/31967 against Jigar Rasiklal Patel (PAN: AAVPP9218N) under Section 15-I of the SEBI Act, 1992 for engaging in manipulative and deceptive trading practices in Illiquid Stock Options (ISO) on BSE Ltd. During the investigation period from April 1, 2014 to September 30, 2015, the entity executed reversal trades that created false or misleading appearance of trading and artificial volumes in stock options contracts. These activities violated SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003.

Key Points

  • Investigation revealed 2,91,744 reversal trades comprising 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
  • Jigar Rasiklal Patel was identified as one of the entities involved in executing reversal trades
  • Reversal trades involved entities reversing their buy or sell positions in a contract with subsequent sell or buy positions with the same counterparty
  • These trades lacked basic trading rationale and portrayed false or misleading appearance of trading
  • Show Cause Notice dated August 08, 2022 was issued to the noticee
  • Adjudicating Officer was appointed on April 04, 2025 to conduct inquiry and impose penalties

Regulatory Violations

  • Violation of Regulation 3(a), (b), (c), (d) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003
  • Violation of Regulation 4(1) and 4(2)(a) of PFUTP Regulations
  • Execution of non-genuine, manipulative and deceptive trades
  • Creation of artificial volumes in illiquid stock options

Compliance Requirements

This is an enforcement action against a specific individual. Market participants should:

  • Avoid executing reversal trades that lack genuine trading rationale
  • Refrain from creating artificial volumes or misleading appearance of trading
  • Ensure all trading activities comply with PFUTP Regulations
  • Maintain genuine trading objectives and avoid manipulative practices

Important Dates

  • Investigation Period: April 1, 2014 to September 30, 2015
  • Show Cause Notice Issued: August 08, 2022
  • Adjudicating Officer Appointed: April 04, 2025
  • Order Number: Order/JS/YK/2025-26/31967

Impact Assessment

This adjudication order is part of SEBI’s broader enforcement action against manipulation in illiquid stock options segment on BSE. The case represents one of 14,720 entities identified for non-genuine trading during the investigation period. The action demonstrates SEBI’s commitment to maintaining market integrity and deterring manipulative practices in derivatives segments. While the order impacts only the specific individual, it serves as a warning to market participants about consequences of engaging in artificial volume creation and reversal trades without genuine trading rationale.

Impact Justification

Enforcement action against individual trader for manipulative practices in illiquid stock options. High severity due to market manipulation but low broad impact as it affects only the specific individual penalized.