Description

SEBI adjudication order imposing penalty on Rajwadi Retail Trade Systems Private Limited for executing 43 non-genuine reversal trades in illiquid stock options on BSE during April 2014 to September 2015, creating artificial trading volume.

Summary

SEBI has passed Adjudication Order No. Order/AK/GN/2026-27/32366 against Rajwadi Retail Trade Systems Private Limited (PAN: AAECR4394M) for alleged participation in non-genuine reversal trades in the illiquid stock options segment of BSE. The investigation covered the period April 1, 2014 to September 30, 2015, during which SEBI found large-scale artificial volume creation through coordinated reversal trades.

Key Points

  • SEBI investigated trading in BSE stock options segment for the period April 1, 2014 to September 30, 2015
  • A total of 2,91,744 trades comprising 81.40% of all stock options trades on BSE during the investigation period were found to be allegedly non-genuine
  • Rajwadi Retail Trade Systems Private Limited executed 43 non-genuine trades across 6 stock options contracts, generating artificial volume of 3,57,500 units
  • The trades were alleged to be manipulative and deceptive, creating a false or misleading appearance of trading activity
  • Show Cause Notice was issued on August 08, 2022; delivery was initially unsuccessful via SPAD and email
  • The case was transferred and the undersigned Adjudicating Officer was appointed via order dated April 03, 2025

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 — Regulations 3(a), (b), (c), (d), 4(1), and 4(2)(a)
  • Section 15HA of the SEBI Act, 1992 (penalty provisions)
  • Section 15-I of the SEBI Act, 1992 read with Rule 5 of SEBI (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995

Compliance Requirements

  • The Noticee (Rajwadi Retail Trade Systems Private Limited) is subject to the penalty imposed under Section 15HA of the SEBI Act
  • Market participants dealing in stock options must ensure all trades are genuine and do not create artificial volumes or misleading appearances of trading activity
  • Entities must maintain valid and reachable contact details with SEBI and exchanges to ensure regulatory correspondence is received

Important Dates

  • April 1, 2014 – September 30, 2015: Investigation period for illiquid stock options trading on BSE
  • August 8, 2022: Show Cause Notice (SCN) issued to the Noticee
  • August 10, 2022: SCN service attempted via SPAD and email (returned undelivered)
  • April 3, 2025: Current Adjudicating Officer appointed via transfer order
  • April 2026: Final adjudication order passed (Order/AK/GN/2026-27/32366)

Impact Assessment

This order has limited broader market impact as it pertains to historical violations by a single entity over a decade ago. However, it is part of SEBI’s sustained enforcement action against participants in the BSE illiquid stock options manipulation scheme, which collectively involved 2,91,744 non-genuine trades representing 81.40% of all stock options trades during the investigation period. The enforcement signals SEBI’s continued commitment to pursuing market manipulation cases to conclusion regardless of the time elapsed. Market participants in derivatives segments should note SEBI’s rigorous scrutiny of reversal trades and coordinated trading patterns that generate artificial volumes.

Impact Justification

Routine individual adjudication order for historical violations (2014-15 period); limited market-wide impact as it targets a single entity for past misconduct in illiquid stock options.