Description

SEBI adjudication order imposing penalty on Maa Mahamaya Rolling Mill Pvt. Ltd. for executing non-genuine reversal trades in illiquid stock options at BSE during April 2014 to September 2015, creating artificial trading volumes.

Summary

SEBI’s Adjudicating Officer issued an order against Maa Mahamaya Rolling Mill Private Limited (PAN: AAECM1456D) for alleged manipulation of illiquid stock options at BSE. The entity executed 20 non-genuine reversal trades across 5 stock options contracts during the investigation period of April 1, 2014 to September 30, 2015, resulting in artificial volume of 18,30,000 units. This is part of a broader SEBI investigation into large-scale reversal trades at BSE that accounted for 81.40% of all stock options trades during the period.

Key Points

  • Noticee executed 20 non-genuine trades in 5 stock options contracts at BSE
  • Artificial volume created: 18,30,000 units
  • Investigation period: April 1, 2014 to September 30, 2015
  • SEBI found 2,91,744 total alleged non-genuine trades (81.40% of all BSE stock options trades) across all entities during this period
  • Violations alleged under PFUTP Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a)
  • Show Cause Notice issued on August 30, 2022
  • Adjudicating Officer originally appointed: Dr. Anitha Anoop; transferred to undersigned AO via order dated April 03, 2025
  • Penalty provision invoked: Section 15HA of the SEBI Act, 1992

Regulatory Changes

No new regulatory changes introduced. This order applies existing provisions of:

  • SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (PFUTP Regulations)
  • Section 15HA and Section 15-I of the SEBI Act, 1992
  • SEBI (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995

Compliance Requirements

  • Market participants must not engage in reversal trades or any trades designed to create artificial volumes in the stock options segment
  • Entities must avoid executing non-genuine trades that result in false or misleading appearance of trading activity
  • Compliance with PFUTP Regulations 3 and 4 is mandatory for all market participants

Important Dates

  • Investigation Period: April 1, 2014 – September 30, 2015
  • Show Cause Notice issued: August 30, 2022
  • AO transfer order: April 3, 2025
  • Adjudication Order: March 2026 (Order No. Order/AK/GN/2025-26/32202)

Impact Assessment

This order has limited direct market impact as it pertains to historical misconduct from 2014-2015. However, it signals SEBI’s continued and long-term pursuit of entities involved in the widespread illiquid stock options manipulation at BSE. The broader investigation covered hundreds of thousands of non-genuine trades, and this order is one of many enforcement actions arising from that probe. Market participants in the derivatives segment should note SEBI’s willingness to pursue enforcement actions years after the fact for market manipulation violations.

Impact Justification

Enforcement action for historical misconduct (2014-2015) targeting a single private company for market manipulation via reversal trades in illiquid stock options. Significant from a regulatory enforcement perspective but limited current market impact.