Description

SEBI imposes penalty on Amanat Developers Private Limited 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 against Amanat Developers Private Limited (PAN: AAGCA9440D) for executing non-genuine trades in illiquid stock options on BSE. During the investigation period from April 1, 2014 to September 30, 2015, the entity executed 8 non-genuine trades in 3 stock options contracts, resulting in artificial volume of 3,88,000 units. The company is alleged to have violated SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003, specifically Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a).

Key Points

  • SEBI investigated large-scale reversal of trades in stock options segment of BSE
  • Total of 2,91,744 trades (81.40% of all trades) in stock options during the investigation period were allegedly non-genuine
  • Amanat Developers Private Limited executed 8 non-genuine trades in 3 stock options contracts
  • Artificial volume created totaled 3,88,000 units
  • Investigation period: April 1, 2014 to September 30, 2015
  • Show Cause Notice issued on August 02, 2022
  • Adjudicating Officer appointed under Section 15-I of SEBI Act, 1992
  • Current AO appointed on April 04, 2025 following transfer of case

Regulatory Changes

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

Compliance Requirements

  • Entities must ensure all trades in stock options are genuine and not executed merely to 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
  • Compliance with Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a) of PFUTP Regulations, 2003 is mandatory

Important Dates

  • Investigation Period: April 1, 2014 to September 30, 2015
  • Initial AO Appointment: July 27, 2022
  • Show Cause Notice Issued: August 02, 2022
  • SCN Issued via SPAD and Email: August 08, 2022
  • Current AO Appointment: April 04, 2025
  • Adjudication Order Number: Order/AK/GN/2025-26/31999

Impact Assessment

Market Impact: This enforcement action reinforces SEBI’s commitment to maintaining market integrity in the stock options segment. The investigation revealed that over 81% of trades in BSE stock options during the investigation period were non-genuine, indicating widespread manipulation that undermined market confidence.

Operational Impact: Market participants engaged in options trading must implement stronger internal controls to ensure trade genuineness. Brokers and trading members need enhanced surveillance mechanisms to detect and prevent reversal trades that create artificial volumes.

Regulatory Precedent: This order demonstrates SEBI’s continued focus on addressing historical cases of market manipulation, with adjudication proceedings initiated years after the violations occurred, showing that regulatory action can follow investigations with significant time lags.

Impact Justification

Enforcement action against specific entity for historical market manipulation in stock options segment. Demonstrates SEBI's action against artificial volume creation but limited to one entity.