Description

SEBI imposes penalty on Basundhara Marcom Pvt. Ltd. for executing non-genuine reversal trades in illiquid stock options on BSE during April 2014 to September 2015, creating artificial volumes.

Summary

SEBI has issued an adjudication order (Order No. Order/JS/RJ/2025-26/31991) against Basundhara Marcom Pvt. Ltd. (PAN: AAECB7768B) for engaging in 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 one of 14,720 entities found to have executed manipulative trades that created false or misleading appearance of trading through artificial volumes. The case was transferred to a new Adjudicating Officer on April 4, 2025.

Key Points

  • Basundhara Marcom Pvt. Ltd. executed non-genuine reversal trades in BSE’s stock options segment during April 2014 to September 2015
  • During the investigation period, 2,91,643 trades (81.38% of all trades) in BSE stock options segment involved reversal of buy and sell positions
  • The entity reversed buy or sell positions in contracts with subsequent sell or buy positions with the same counterparty
  • These reversal trades lacked basic trading rationale and created artificial volume in contracts
  • A total of 14,720 entities were found to have executed non-genuine trades in BSE’s stock options segment
  • Show Cause Notice was issued on August 4, 2021 by the erstwhile Adjudicating Officer
  • Case was 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.

Compliance Requirements

  • Entities must not engage in reversal trades that create false or misleading appearance of trading
  • Trading activities must have genuine trading rationale and not be designed to create artificial volumes
  • Market participants must comply with regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a) of PFUTP Regulations, 2003
  • Entities must avoid manipulative and deceptive trading practices in stock options segment

Important Dates

  • April 1, 2014 to September 30, 2015: Investigation Period for illiquid stock options trading on BSE
  • August 4, 2021: Show Cause Notice issued to Basundhara Marcom Pvt. Ltd.
  • April 4, 2025: Transfer of case to new Adjudicating Officer under Section 15-I of SEBI Act, 1992

Impact Assessment

Market Impact: Limited current market impact as this relates to historical violations from 2014-2015. However, demonstrates SEBI’s continued enforcement against manipulative trading practices.

Operational Impact: Specific to Basundhara Marcom Pvt. Ltd. and does not impose new compliance obligations on other market participants. Reinforces existing prohibitions against creating artificial volumes and engaging in non-genuine trades.

Enforcement Significance: Part of broader investigation involving 14,720 entities, showing comprehensive regulatory action against widespread manipulation in illiquid stock options segment. Underscores importance of maintaining genuine trading practices and avoiding schemes to create misleading market activity.

Impact Justification

Individual entity penalty for historical violations (2014-2015) with limited market-wide impact, though highlights enforcement against manipulative trading practices