Description

SEBI imposes adjudication proceedings against Amit S Yadav for alleged violations related to non-genuine reversal trades in illiquid stock options on BSE during April 2014 to September 2015.

Summary

SEBI issued an adjudication order against Amit S Yadav (PAN: ADZPY6811D) for alleged manipulative trading activities in illiquid stock options on BSE. During the investigation period from April 1, 2014 to September 30, 2015, the entity was found to have executed non-genuine reversal trades that created artificial volumes and false appearances of trading. The case was initiated following SEBI’s broader investigation into 14,720 entities involved in similar activities, where 2,91,643 trades (81.38% of all trades) in BSE’s stock options segment involved reversal of buy and sell positions.

Key Points

  • Investigation covered the period from April 1, 2014 to September 30, 2015
  • Total of 2,91,643 reversal trades identified, comprising 81.38% of all trades executed in BSE stock options segment
  • 14,720 entities found to have executed non-genuine trades during the investigation period
  • Amit S Yadav was one of the entities identified for executing reversal trades
  • Reversal trades involved entities reversing their buy or sell positions with the same counterparty in the same contract
  • Trades lacked basic trading rationale and allegedly portrayed false or misleading appearance
  • Show Cause Notice issued on November 15, 2021
  • Adjudication Order Number: Order/JS/RJ/2025-26/32018

Regulatory Changes

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

Compliance Requirements

  • Market participants must ensure trades have genuine trading rationale and economic purpose
  • Avoid reversal trades with same counterparties that create artificial volumes
  • Trading activities in stock options must not create false or misleading appearance of trading
  • Entities must comply with PFUTP Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a)

Important Dates

  • Investigation Period: April 1, 2014 to September 30, 2015
  • Show Cause Notice issued: November 15, 2021
  • Adjudicating Officer appointment: April 4, 2025
  • Order publication: February 3, 2026

Impact Assessment

This is an individual adjudication order with minimal market-wide impact. The order addresses historical trading violations from 2014-2015 in the illiquid stock options segment on BSE. While part of a larger investigation involving over 14,700 entities, this specific order affects only one individual trader. The case reinforces SEBI’s continued focus on eliminating manipulative practices in derivatives segments, particularly in illiquid contracts where artificial volume creation is easier to execute. Market participants engaged in options trading should ensure their trading strategies have genuine economic rationale and avoid patterns that could be construed as creating artificial volumes or misleading market appearance.

Impact Justification

Individual adjudication order with limited market-wide impact; specific to one entity's trading violations in illiquid stock options segment during 2014-2015