Description

SEBI imposes penalty on Ravi Ludhiyani HUF for executing non-genuine reversal trades in illiquid stock options on BSE during April 2014 to September 2015, creating artificial volume and misleading appearance of trading.

Summary

SEBI issued Adjudication Order No. Order/JS/YK/2025-26/32026 against Ravi Ludhiyani HUF (PAN: AAQHR9636F) under Section 15-I of SEBI Act, 1992 for violations related to dealing in illiquid stock options on BSE. The investigation covered the period from April 1, 2014 to September 30, 2015, during which SEBI observed large-scale reversal of trades creating artificial volume. Ravi Ludhiyani HUF was one of 14,720 entities found to have executed non-genuine trades, reversing buy/sell positions with same counterparties, creating false or misleading appearance of trading activity.

Key Points

  • Investigation period: April 1, 2014 to September 30, 2015
  • Total of 2,91,643 trades (81.38% of all stock options trades on BSE) involved reversal of positions
  • Ravi Ludhiyani HUF executed reversal trades where buy/sell positions were reversed with same counterparty
  • Such trades lacked basic trading rationale and created artificial volume
  • 14,720 entities total were found involved in similar non-genuine trading practices
  • Show Cause Notice issued on August 08, 2022 by erstwhile Adjudicating Officer
  • Case transferred to current Adjudicating Officer on April 04, 2025
  • Alleged violations of PFUTP Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a)

Regulatory Changes

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

Compliance Requirements

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

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

Important Dates

  • Investigation Period: April 1, 2014 to September 30, 2015
  • Show Cause Notice issued: August 08, 2022
  • Adjudicating Officer appointment: April 04, 2025
  • Order date: February 2026 (exact date not specified in excerpt)

Impact Assessment

Limited market impact as this is an individual adjudication order for historical violations from 2014-2015. The order is part of SEBI’s broader enforcement action against manipulation in illiquid stock options segment on BSE involving thousands of entities. This demonstrates SEBI’s continued vigilance against market manipulation and artificial volume creation, even years after the violations occurred. The order serves as a deterrent but does not introduce new compliance obligations or affect current market operations.

Impact Justification

Individual adjudication order against a single HUF entity for past violations (2014-2015) in illiquid stock options. Limited systemic impact as part of broader investigation involving 14,720 entities. No new regulatory changes or compliance requirements for broader market.