Description

SEBI adjudication order against Ranjeet Singh Baid HUF for engaging in non-genuine reversal trades in illiquid stock options on BSE during April 2014 to September 2015, violating PFUTP Regulations.

Summary

SEBI has issued an adjudication order against Ranjeet Singh Baid HUF (PAN: AAPHR3293F) for engaging in non-genuine reversal trades in illiquid stock options on BSE during the period April 1, 2014 to September 30, 2015. The entity is alleged to have violated regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003. The case is part of SEBI’s broader investigation into large-scale manipulation in BSE’s stock options segment where 81.38% of all trades (2,91,643 trades) involved reversal patterns.

Key Points

  • SEBI investigated manipulation in illiquid stock options on BSE from April 1, 2014 to September 30, 2015
  • During the investigation period, 2,91,643 trades (81.38% of all stock options trades on BSE) involved reversal of buy and sell positions
  • A total of 14,720 entities were found to have executed non-genuine trades in BSE’s stock options segment
  • Ranjeet Singh Baid HUF was identified as one of the entities executing reversal trades
  • Reversal trades involved entities reversing their buy or sell positions in a contract with subsequent sell or buy positions with the same counterparty
  • Such trades lacked basic trading rationale and created false or misleading appearance of trading
  • The trades created artificial volume in stock options contracts
  • Show Cause Notice was issued on August 08, 2022 by the erstwhile Adjudicating Officer
  • Current Adjudicating Officer was appointed on April 04, 2025 pursuant to case transfer

Regulatory Changes

No new regulatory changes introduced. This is an enforcement action under existing SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003.

Compliance Requirements

This is an adjudication proceeding against a specific entity. Market participants should avoid:

  • Executing reversal trades that lack genuine trading rationale
  • Creating artificial volume through coordinated buy-sell positions with same counterparties
  • Engaging in trades that create false or misleading appearance of trading activity
  • Manipulative and deceptive trading practices in illiquid stock options

Important Dates

  • Investigation Period: April 1, 2014 to September 30, 2015
  • Show Cause Notice issued: August 08, 2022
  • Adjudicating Officer appointment: April 04, 2025

Impact Assessment

This adjudication order targets an individual HUF entity as part of SEBI’s large-scale enforcement action against manipulation in illiquid stock options on BSE. The case relates to historical trading activities from 2014-2015 and has minimal current market impact. The investigation uncovered systematic manipulation affecting over 80% of stock options trades during the period, involving nearly 15,000 entities. This enforcement action demonstrates SEBI’s commitment to maintaining market integrity and deterring artificial volume creation, though the specific order against this single entity has limited broader market implications.

Impact Justification

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