Description

SEBI adjudication order against Nilesh Pramodbhai Shah HUF for alleged manipulative and deceptive trading practices in illiquid stock options on BSE during April 2014 to September 2015.

Summary

SEBI issued Adjudication Order No. Order/JS/DP/2025-26/32024 under Section 15-I of the SEBI Act against Nilesh Pramodbhai Shah HUF (PAN: AADHN5042C) for alleged violations involving manipulative trading in Illiquid Stock Options on BSE. The entity was identified among 14,720 entities that executed non-genuine reversal trades during the investigation period from April 1, 2014 to September 30, 2015. These trades allegedly created false or misleading appearance of trading through artificial volumes, violating PFUTP Regulations.

Key Points

  • Investigation covered the period April 1, 2014 to September 30, 2015 for trading in illiquid stock options on BSE
  • Total of 2,91,744 reversal trades identified, comprising 81.41% of all trades in BSE stock options segment
  • Reversal trades involved entities reversing buy/sell positions with the same counterparty in the same contract
  • 14,720 entities found engaged in non-genuine trading practices during the investigation period
  • Nilesh Pramodbhai Shah HUF identified as one of the entities executing reversal trades
  • Show Cause Notice issued on January 3, 2022 for alleged violations
  • Adjudicating Officer appointed on April 4, 2025 following transfer from previous AO

Regulatory Changes

No new regulatory changes introduced. This is an enforcement action under existing PFUTP Regulations.

Compliance Requirements

  • Market participants must ensure trades have genuine trading rationale and economic purpose
  • Avoid reversal trades that create artificial volumes or misleading appearance of trading
  • Trading practices must comply with regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a) of PFUTP Regulations
  • Trades should not be manipulative or deceptive in nature

Important Dates

  • Investigation Period: April 1, 2014 to September 30, 2015
  • Show Cause Notice: January 3, 2022
  • Adjudicating Officer Appointment: April 4, 2025
  • Order Date: February 4, 2026

Impact Assessment

This adjudication order targets a specific individual HUF entity for historical violations in the illiquid stock options segment. The impact is limited to the named entity and serves as an enforcement precedent. The case is part of SEBI’s broader crackdown on artificial volume creation through reversal trades in illiquid derivatives during 2014-2015. Market participants trading in options should note SEBI’s strict stance against trades lacking genuine economic rationale, particularly those creating false appearance of liquidity through coordinated reversals with counterparties.

Impact Justification

Individual adjudication order against a single HUF entity for past violations (2014-2015) in illiquid stock options. No systemic market impact or regulatory changes. Limited relevance to broader market participants.