Description

SEBI adjudication order against Raman Kumar & Sons (HUF) for executing non-genuine reversal trades in illiquid stock options on BSE during April 2014 to September 2015, in violation of PFUTP Regulations 2003.

Summary

SEBI’s Adjudicating Officer issued Order No. Order/JS/YK/2025-26/32140 against Raman Kumar & Sons (HUF) (PAN: AAMHR4119K) for alleged participation in non-genuine reversal trades in the Illiquid Stock Options (ISO) segment on BSE. The investigation covered the period April 1, 2014 to September 30, 2015, during which SEBI found large-scale artificial volume creation through coordinated buy-sell reversals with the same counterparties.

Key Points

  • SEBI investigated illiquid stock options trading on BSE for the period April 1, 2014 to September 30, 2015
  • 2,91,643 trades representing 81.38% of all BSE stock options trades were identified as reversal trades lacking genuine trading rationale
  • 14,720 entities were found to have executed non-genuine trades; Raman Kumar & Sons (HUF) was one such entity
  • The noticee’s trades allegedly created false or misleading appearance of trading activity and artificial volume in stock options contracts
  • Adjudicating Officer was appointed via communiqué dated April 04, 2025 under Section 15-I of the SEBI Act
  • Show Cause Notice was issued on August 10, 2022 by the erstwhile Adjudicating Officer
  • Adjudication Order reference: Order/JS/YK/2025-26/32140

Regulatory Changes

No new regulatory changes introduced. This is an enforcement order applying existing provisions of SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003 (PFUTP Regulations), specifically Regulations 3(a), (b), (c), (d), 4(1), and 4(2)(a), read with Section 15HA of the SEBI Act, 1992.

Compliance Requirements

  • Market participants must refrain from executing reversal trades or coordinated buy-sell transactions that create artificial volume in any exchange segment
  • Entities must ensure all trades reflect genuine economic intent with legitimate trading rationale
  • HUFs and other entities participating in derivatives markets must maintain records demonstrating bona fide trading activity

Important Dates

  • Investigation Period: April 1, 2014 – September 30, 2015
  • Show Cause Notice issued: August 10, 2022
  • New AO appointed: April 04, 2025
  • Order date: February 20, 2026

Impact Assessment

This order has minimal broader market impact as it is an enforcement action against a single HUF entity for historical violations. It is part of SEBI’s ongoing mass adjudication proceedings in the illiquid stock options matter, which has covered thousands of entities. The order reinforces SEBI’s stance on market manipulation through reversal trades and signals continued enforcement even for older investigation periods. Penalties, if any, apply solely to the noticee.

Impact Justification

Enforcement action against a single HUF entity for historical trading violations (2014-2015). Part of a broader SEBI investigation into illiquid stock options manipulation involving 14,720 entities; no systemic regulatory changes or market-wide impact.