Description

SEBI imposes penalty on I Zone Academy Private Limited for executing non-genuine trades in illiquid stock options at BSE during April 2014 to September 2015, creating artificial volumes.

Summary

SEBI issued an adjudication order against I Zone Academy Private Limited (PAN: AACCI0592E) for violating SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003. The entity was found to have executed 18 non-genuine trades in 9 stock options contracts on BSE during April 1, 2014 to September 30, 2015, resulting in artificial volume of 13,58,000 units. The investigation revealed that 2,91,744 trades (81.40% of all trades) in BSE’s stock options segment during the investigation period were allegedly non-genuine, creating artificial volumes.

Key Points

  • I Zone Academy Private Limited executed 18 reversal trades in 9 stock options contracts during the investigation period
  • These trades created artificial volume of 13,58,000 units
  • The trades were non-genuine in nature and created false or misleading appearance of trading
  • Overall, 81.40% of all trades (2,91,744 trades) in BSE stock options segment during April 2014 to September 2015 were allegedly non-genuine
  • Show Cause Notice was issued on August 02, 2022
  • Mr. G Ramar was initially appointed as Adjudicating Officer on July 27, 2021
  • Case was subsequently transferred to a new AO on April 04, 2025

Regulatory Changes

No new regulatory changes introduced. This order enforces existing provisions under:

  • Regulations 3(a), (b), (c), (d) of SEBI (PFUTP) Regulations, 2003
  • Regulations 4(1) and 4(2)(a) of SEBI (PFUTP) Regulations, 2003
  • Section 15-I of SEBI Act, 1992
  • Section 15HA of SEBI Act, 1992

Compliance Requirements

  • Entities trading in stock options must ensure trades are genuine and not create artificial volumes
  • Market participants must avoid reversal trades that create false or misleading appearance of trading
  • Trading activities must not be manipulative or deceptive in nature
  • Entities must comply with SEBI (PFUTP) Regulations to prevent fraudulent and unfair trade practices

Important Dates

  • Investigation Period: April 1, 2014 to September 30, 2015
  • AO Appointment: July 27, 2021 (Mr. G Ramar)
  • Show Cause Notice Date: August 02, 2022
  • Transfer of Case: April 04, 2025
  • Order Number: Order/AK/GN/2025-26/31988

Impact Assessment

This adjudication order is part of SEBI’s broader crackdown on manipulation in illiquid stock options trading at BSE. The finding that over 81% of trades in the stock options segment were non-genuine during the investigation period highlights systemic issues in this market segment during 2014-2015. The order serves as a deterrent against creating artificial volumes through reversal trades. Impact is primarily on the specific entity penalized, though the enforcement action reinforces market integrity standards for all participants in stock options trading.

Impact Justification

Adjudication order against a specific entity for historical market manipulation in illiquid stock options. While serious violation, impact limited to one entity and historical period (2014-2015).