Description

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

Summary

SEBI’s Adjudication Order (Order/AK/GN/2025-26/31987) against Amita Bhalla (PAN: AAAPB2585M) for violations related to trading in illiquid stock options on BSE. During the investigation period (April 1, 2014 to September 30, 2015), SEBI observed large-scale reversal of trades in BSE’s stock options segment creating artificial volumes. Amita Bhalla executed 4 non-genuine trades in 2 stock options contracts resulting in artificial volume of 2,60,000 units. The case was initiated under Section 15-I of SEBI Act, 1992 for alleged violations of PFUTP Regulations, 2003.

Key Points

  • Total of 2,91,744 trades (81.40% of all trades) in BSE stock options segment during the investigation period were allegedly non-genuine
  • Amita Bhalla executed 4 non-genuine trades in 2 stock options contracts
  • Artificial volume created: 2,60,000 units
  • Investigation period: April 1, 2014 to September 30, 2015
  • Alleged violations: Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a) of PFUTP Regulations, 2003
  • Adjudicating Officer: Initially Mr. Suresh B Menon (appointed July 27, 2021), later transferred (April 4, 2025)
  • Show Cause Notice issued: November 15, 2021
  • First Post SCN Intimation delivered via email: August 18, 2022

Regulatory Changes

No new regulatory changes. This order enforces existing provisions of:

  • SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003
  • Section 15-I and Section 15HA of SEBI Act, 1992
  • SEBI (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995

Compliance Requirements

  • Market participants must avoid engaging in reversal trades that create artificial volumes
  • All trades in stock options must be genuine and not manipulative or deceptive in nature
  • Trading activities should not create false or misleading appearance of trading through artificial volumes
  • Entities must not participate in schemes designed to manipulate market volumes or create non-genuine trading activity

Important Dates

  • Investigation Period: April 1, 2014 to September 30, 2015
  • First AO Appointment: July 27, 2021
  • Show Cause Notice: November 15, 2021
  • First Post SCN Intimation: August 4, 2022 (delivered August 18, 2022)
  • Transfer of AO: April 4, 2025

Impact Assessment

This adjudication order is part of SEBI’s broader investigation into systemic manipulation of illiquid stock options on BSE. The finding that 81.40% of all trades in the stock options segment were non-genuine indicates widespread market manipulation during the investigation period. For individual market participants, this reinforces SEBI’s strict enforcement against creating artificial volumes and executing non-genuine trades. The order demonstrates regulatory vigilance in maintaining market integrity, particularly in illiquid segments where manipulation is easier. While the individual impact of Amita Bhalla’s trades (2,60,000 units across 4 trades) is relatively small, it forms part of a larger pattern of market abuse that undermined the credibility of BSE’s stock options segment.

Impact Justification

Individual adjudication order for non-genuine trading in illiquid stock options. Part of larger investigation into artificial volume creation at BSE. Limited market-wide impact but significant for market integrity enforcement.