Description

SEBI adjudication order against Ashok Kumar Gupta & Sons HUF for alleged manipulation through reversal trades in illiquid stock options on BSE during April 2014 to September 2015, in violation of PFUTP Regulations.

Summary

SEBI’s Adjudicating Officer issued an order (No. Order/JS/DP/2025-26/32150) against Ashok Kumar Gupta & Sons HUF (PAN: AAOHA5520P) for alleged non-genuine reversal trades in the Illiquid Stock Options (ISO) segment on BSE during the investigation period of April 1, 2014 to September 30, 2015. The alleged trades are said to have created artificial volumes and portrayed a false or misleading appearance of trading activity.

Key Points

  • SEBI investigated large-scale reversal trades in BSE’s Illiquid Stock Options (ISO) segment for the period April 1, 2014 to September 30, 2015.
  • A total of 2,91,744 trades, comprising 81.41% of all trades in BSE’s stock options segment, were identified as reversal trades — entities reversing buy/sell positions with the same counterparty.
  • 14,720 entities were found to have executed such non-genuine trades; Ashok Kumar Gupta & Sons HUF was one of them.
  • The reversal trades allegedly lacked basic trading rationale and created artificial volume, constituting manipulative and deceptive conduct.
  • The Adjudicating Officer was appointed on April 04, 2025 following transfer from the erstwhile AO.
  • A Show Cause Notice (SCN) was issued to the Noticee on October 26, 2021 under Rule 4(1) of the SEBI (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995.

Regulatory Changes

No new regulatory changes are introduced. This order is an enforcement action under existing regulations:

  • Section 15-I and Section 15HA of the SEBI Act, 1992
  • Rule 5 of SEBI (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995
  • Regulations 3(a), (b), (c), (d), 4(1), and 4(2)(a) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003 (PFUTP Regulations)

Compliance Requirements

This order is specific to the Noticee (Ashok Kumar Gupta & Sons HUF) and does not impose new compliance obligations on other market participants. General guidance for all market participants:

  • Avoid reversal trades or circular trading structures that create artificial volume in any market segment.
  • Ensure all trades have genuine economic rationale and do not constitute manipulative or deceptive practices under PFUTP Regulations.

Important Dates

  • Investigation Period: April 1, 2014 – September 30, 2015
  • Show Cause Notice Issued: October 26, 2021
  • Current AO Appointed: April 04, 2025
  • Order Reference: Order/JS/DP/2025-26/32150

Impact Assessment

This adjudication order has minimal broader market impact as it is directed at a single entity (HUF) for historical violations. The matter pertains to a 2014-2015 investigation into BSE’s illiquid stock options segment, which has since been subject to enhanced surveillance and regulatory action across thousands of entities. The order reinforces SEBI’s continued enforcement posture on ISO manipulation cases and signals that proceedings initiated years ago continue to be prosecuted to conclusion.

Impact Justification

Entity-specific enforcement action against a single HUF for historical trading violations (2014-2015). No current market impact or regulatory changes applicable to other market participants.