Description

SEBI adjudication order against Rashmi Chandak for executing non-genuine reversal trades in Illiquid Stock Options on BSE during April 2014 to September 2015, violating PFUTP Regulations.

Summary

SEBI issued an adjudication order against Rashmi Chandak (PAN: AEKPC4067M) for participating in non-genuine reversal trades in the Illiquid Stock Options (ISO) segment of BSE during the investigation period of April 1, 2014 to September 30, 2015. SEBI’s investigation found that 81.41% of all trades in BSE’s stock options segment during this period involved artificial reversal of buy and sell positions, creating false trading volumes. Rashmi Chandak was one of 14,720 entities found to have executed such trades.

Key Points

  • SEBI investigated large-scale reversal trades in Illiquid Stock Options on BSE for the period April 1, 2014 to September 30, 2015
  • 2,91,744 trades comprising 81.41% of all stock options trades on BSE were identified as non-genuine reversal trades
  • Rashmi Chandak was among 14,720 entities found to have executed non-genuine reversal trades
  • Trades were alleged to be manipulative and deceptive, creating artificial volumes in stock options contracts
  • Violations alleged under Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a) of SEBI (PFUTP) Regulations, 2003
  • Show Cause Notice was issued on August 01, 2022
  • Adjudicating Officer was appointed vide communiqué dated April 04, 2025 under Section 15-I of the SEBI Act
  • Proceedings initiated under Section 15HA of the SEBI Act for imposition of penalty

Regulatory Changes

No new regulatory changes introduced. This is an enforcement action applying existing PFUTP Regulations, 2003 to historical trading conduct.

Compliance Requirements

  • Market participants must not engage in reversal trades or any trading activity that creates artificial volumes or false appearance of trading activity
  • Entities must ensure all trades have genuine economic rationale and do not manipulate market prices or volumes
  • Compliance with Regulations 3 and 4 of SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003 is mandatory

Important Dates

  • April 1, 2014 – September 30, 2015: Investigation period for ISO trades on BSE
  • August 1, 2022: Show Cause Notice issued to Rashmi Chandak
  • April 4, 2025: New Adjudicating Officer appointed following case transfer

Impact Assessment

This order is an individual enforcement action with limited direct market impact. It is part of a broader SEBI crackdown on manipulative trading in BSE’s Illiquid Stock Options segment involving 14,720 entities. The order reinforces SEBI’s commitment to pursuing market manipulation cases even years after the violation period. No systemic changes to trading rules or market structure are introduced by this order. Penalty quantum is not specified in the available content.

Impact Justification

Individual enforcement action against a single entity for historical trading violations (2014-15); penalty is individual-specific with no broader market rule changes.