Description

SEBI imposes penalty on Sushil Kumar Saraf for executing non-genuine reversal trades in illiquid stock options on BSE during April 2014 to September 2015, creating artificial volumes.

Summary

SEBI issued an adjudication order against Sushil Kumar Saraf (PAN: AKUPS9187L) for violations related to non-genuine trading in illiquid stock options on BSE during April 1, 2014 to September 30, 2015. The investigation revealed that Saraf executed reversal trades where buy/sell positions were reversed with the same counterparty, creating artificial volumes and false appearance of trading. This was part of a larger investigation involving 14,720 entities where 2,91,643 trades (81.38% of all stock options trades) were identified as reversal trades. The order was issued under Adjudication Order No. Order/JS/YK/2025-26/31977.

Key Points

  • Investigation period: April 1, 2014 to September 30, 2015
  • Total reversal trades identified: 2,91,643 trades comprising 81.38% of all BSE stock options trades
  • Total entities involved in manipulation: 14,720
  • Sushil Kumar Saraf executed non-genuine reversal trades in illiquid stock options
  • Trades involved reversing buy/sell positions with same counterparty in same contract
  • Alleged violations: SEBI PFUTP Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a)
  • Show Cause Notice issued: August 5, 2022
  • Adjudicating Officer appointed: April 4, 2025

Regulatory Changes

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

Compliance Requirements

This adjudication order serves as enforcement action against historical violations. Market participants are reminded that:

  • Reversal trades creating artificial volumes are prohibited
  • Non-genuine trades lacking trading rationale violate PFUTP regulations
  • Creating false or misleading appearance of trading is manipulative and deceptive

Important Dates

  • Investigation Period: April 1, 2014 to September 30, 2015
  • Show Cause Notice: August 5, 2022
  • AO Appointment: April 4, 2025
  • Order Date: January 20, 2026

Impact Assessment

Limited market impact as this is an individual enforcement action for historical violations from 2014-2015. The order is part of SEBI’s broader crackdown on illiquid stock options manipulation involving thousands of entities. The case highlights SEBI’s continued efforts to prosecute market manipulation even years after occurrence. No immediate operational impact on current market participants, but serves as deterrent against similar manipulative practices in derivatives segments.

Impact Justification

Individual adjudication order for historical violations (2014-2015) with limited systemic impact; part of broader enforcement action against 14,720 entities involved in illiquid stock options manipulation