Description

SEBI imposes penalty on Vikram Anand HUF for executing non-genuine reversal trades in illiquid stock options on BSE during April 2014 to September 2015, creating artificial volumes and misleading market appearance.

Summary

SEBI has issued an adjudication order (Order No. Order/JS/DP/2025-26/31969) against Vikram Anand HUF (PAN: AAJHV0926R) for alleged violations relating to non-genuine trading in Illiquid Stock Options on BSE during the period April 1, 2014 to September 30, 2015. The entity was found to be executing reversal trades where buy and sell positions were reversed with the same counterparty, creating artificial volumes and false or misleading appearance of trading. The investigation revealed that 2,91,744 trades (81.41% of all trades in stock options segment) were reversal trades, and 14,720 entities including the Noticee were involved in such non-genuine trading activities.

Key Points

  • Adjudication proceedings initiated under Section 15-I of SEBI Act, 1992 and SEBI (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995
  • Investigation period: April 1, 2014 to September 30, 2015
  • Noticee allegedly executed reversal trades in illiquid stock options on BSE
  • Reversal trades involved reversing buy/sell positions with same counterparty in same contract
  • Such trades allegedly lacked trading rationale and created artificial volumes
  • 81.41% of all trades in BSE stock options segment during investigation period were reversal trades
  • Total 14,720 entities found involved in non-genuine trades during the investigation period
  • Show Cause Notice issued on July 14, 2021
  • Alleged violations of PFUTP Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a)

Regulatory Changes

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

Compliance Requirements

  • Market participants must ensure trades in stock options have genuine trading rationale
  • Entities must avoid reversal trades that create artificial volumes or misleading market appearance
  • Trading activities should not be manipulative or deceptive in nature
  • Compliance with PFUTP Regulations mandatory for all market participants

Important Dates

  • Investigation Period: April 1, 2014 to September 30, 2015
  • Show Cause Notice issued: July 14, 2021
  • Adjudicating Officer appointed: April 4, 2025
  • Order Number: Order/JS/DP/2025-26/31969

Impact Assessment

This adjudication order has limited direct market impact as it addresses historical violations by a single HUF entity during 2014-2015. However, it demonstrates SEBI’s continued enforcement against manipulation in illiquid stock options segment. The order reinforces regulatory oversight on trading practices and serves as a deterrent against creation of artificial volumes through reversal trades. The investigation’s scope covering 14,720 entities indicates widespread concern about trading practices in illiquid stock options during that period. Market participants trading in options should ensure genuine trading rationale and avoid patterns that could be construed as creating false market appearance.

Impact Justification

Individual adjudication order against single HUF entity for historical violations (2014-2015) in illiquid stock options. Limited market-wide impact as it addresses past misconduct by one entity among 14,720 entities investigated. No systemic regulatory changes or broad market implications.