Description

SEBI adjudication order imposing penalty on Sagarotharaka Vanijya Private Limited for executing 30 non-genuine reversal trades in illiquid stock options on BSE during April 2014 to September 2015, creating artificial volumes of 20,12,000 units.

Summary

SEBI has issued Adjudication Order No. Order/AK/RK/2026-27/32339 against Sagarotharaka Vanijya Private Limited (PAN: AAPCS4843R) for participating in non-genuine reversal trades in the illiquid stock options segment of Bombay Stock Exchange (BSE) during the investigation period of April 1, 2014 to September 30, 2015. The entity is alleged to have executed 30 non-genuine trades across 15 stock options contracts, generating artificial volumes of 20,12,000 units.

Key Points

  • SEBI investigated large-scale reversal trades in BSE’s stock options segment that created artificial volumes during April 2014–September 2015.
  • A total of 2,91,744 trades — representing 81.40% of all stock options trades on BSE during the investigation period — were found to be allegedly non-genuine.
  • Sagarotharaka Vanijya Private Limited executed 30 non-genuine trades in 15 stock options contracts, resulting in artificial volume of 20,12,000 units.
  • The trades are alleged to be manipulative and deceptive, creating a false or misleading appearance of trading activity.
  • Show Cause Notice (SCN Ref: EAD-8/AS/AK/40399/1/2022) was issued on August 10, 2022; initial delivery via SPAD was returned undelivered.
  • The adjudicating officer was originally Smt. Asha Shetty; following a case transfer, a new AO was appointed vide Order dated April 03, 2025.

Regulatory Changes

No new regulatory changes are introduced by this order. It applies existing provisions of:

  • SEBI Act, 1992 — Section 15-I and Section 15HA (penalty for fraudulent and unfair trade practices)
  • SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 — Regulations 3(a), 3(b), 3(c), 3(d), 4(1), and 4(2)(a)
  • SEBI (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995 — Rules 3, 4, and 5

Compliance Requirements

  • The Noticee (Sagarotharaka Vanijya Private Limited) is required to respond to the Show Cause Notice and participate in adjudication proceedings.
  • Market participants trading in stock options on exchanges must ensure all trades are genuine and do not create artificial volumes or misleading appearances of trading activity.
  • Entities must not engage in reversal trades or any strategy designed to inflate traded volumes without genuine economic intent.

Important Dates

  • April 1, 2014 – September 30, 2015: Investigation period for illiquid stock options trading on BSE.
  • August 10, 2022: Show Cause Notice issued to the Noticee.
  • April 3, 2025: New Adjudicating Officer appointed following case transfer.
  • 2026-27: Current adjudication order issued under order number Order/AK/RK/2026-27/32339.

Impact Assessment

This order has a limited direct market impact as it pertains to a single private entity’s historical trading conduct from over a decade ago. However, it is part of SEBI’s broader, sustained enforcement campaign targeting artificial volume creation in BSE’s illiquid stock options segment — an initiative that has resulted in proceedings against numerous entities. The order reinforces SEBI’s zero-tolerance stance on manipulative trading practices and signals continued follow-through on enforcement actions stemming from the 2014–2015 investigation. No immediate operational changes are required for the broader market; the impact is confined to the Noticee and serves as a deterrent precedent.

Impact Justification

Enforcement action against a single entity for historical violations (2014-2015) in illiquid stock options; no systemic regulatory change or broad market impact. Relevant primarily as precedent in SEBI's ongoing campaign against artificial volume creation in BSE stock options.