Description

SEBI imposes penalty on Akshat Incorporation for executing non-genuine reversal trades in illiquid stock options on BSE during April 2014 to September 2015, creating artificial volumes in violation of PFUTP Regulations.

Summary

SEBI issued an adjudication order (Order/JS/YK/2025-26/31976) under Section 15-I of the SEBI Act against Akshat Incorporation (PAN: ABAFA1594L) for engaging in manipulative trading practices in illiquid stock options on BSE. During the investigation period from April 1, 2014 to September 30, 2015, the entity executed reversal trades that created artificial volumes and false appearance of trading activity. The investigation revealed that 2,91,643 trades (81.38% of all stock option trades on BSE) involved reversal of buy and sell positions, with 14,720 entities found participating in such non-genuine trades. A Show Cause Notice was issued on August 1, 2022, and adjudication proceedings were initiated for violations of PFUTP Regulations.

Key Points

  • Akshat Incorporation found guilty of executing non-genuine reversal trades in illiquid stock options on BSE
  • Investigation period covered April 1, 2014 to September 30, 2015
  • 81.38% of all stock option trades on BSE during this period (2,91,643 trades) were reversal trades
  • Total of 14,720 entities identified in the large-scale manipulation scheme
  • Reversal trades involved entities reversing buy/sell positions with the same counterparty
  • Such trades created artificial volumes and false appearance of trading activity
  • Alleged violations of Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a) of PFUTP Regulations
  • Show Cause Notice issued on August 1, 2022
  • Case transferred to new Adjudicating Officer on April 4, 2025

Regulatory Changes

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

  • Regulation 3: Prohibition of fraudulent and unfair trade practices
  • Regulation 4: Prohibition of manipulation

Compliance Requirements

  • Market participants must ensure all trades have genuine trading rationale
  • Entities must avoid creating artificial volumes through reversal trades
  • Trades should not create false or misleading appearance of trading activity
  • Market participants must refrain from manipulative and deceptive trading practices
  • Compliance with PFUTP Regulations mandatory for all stock option trading activities

Important Dates

  • Investigation Period: April 1, 2014 to September 30, 2015
  • Show Cause Notice: August 1, 2022
  • Transfer of case to new Adjudicating Officer: April 4, 2025
  • Adjudication Order Number: Order/JS/YK/2025-26/31976

Impact Assessment

Market Impact: Low - This is an individual enforcement action against one entity among 14,720 identified participants in historical manipulation. The trades occurred over 10 years ago (2014-2015) and do not affect current market operations.

Operational Impact: Low - No changes to trading rules or operational procedures. Reinforces existing prohibition against creating artificial volumes and manipulative trading.

Precedential Value: Medium - Part of large-scale enforcement action against illiquid stock option manipulation on BSE. Demonstrates SEBI’s commitment to pursuing historical violations and maintaining market integrity.

Systemic Significance: Low - Individual case within broader investigation. While the overall scheme involved significant market abuse (81.38% of trades), this specific order addresses one participant’s violations.

Impact Justification

Individual adjudication order against single entity for historical violations (2014-2015). Part of larger investigation involving 14,720 entities. No systemic market impact or policy changes. Primarily enforcement action with limited precedential value.