Description

SEBI adjudication order against Asta Das and Radheshyam Kundu, directors of dissolved company Advantech Traders Private Limited, for alleged manipulation through reversal trades in illiquid stock options at BSE during April 2014 to September 2015.

Summary

SEBI has issued an adjudication order against Asta Das (PAN: BBWPD3360C) and Radheshyam Kundu (PAN: BICPK8250P), directors of Advantech Traders Private Limited (ATPL), for their alleged role in executing reversal trades in illiquid stock options at BSE during the investigation period (IP) of April 1, 2014 to September 30, 2015. Since ATPL was struck off and dissolved from the RoC list, SEBI invoked Section 248(7) of the Companies Act, 2013 to pursue individual directors for violations of PFUTP Regulations.

Key Points

  • SEBI investigated large-scale reversal trades in the stock options segment of BSE during April 1, 2014 to September 30, 2015.
  • A total of 2,91,744 trades comprising 81.40% of all trades in BSE’s stock options segment during the IP were allegedly non-genuine.
  • ATPL was identified as one of the entities executing reversal trades, creating artificial trading volumes.
  • The original adjudication proceedings against ATPL were disposed of as the company had been struck off and dissolved by RoC.
  • SEBI re-initiated proceedings against the individual directors — Asta Das and Radheshyam Kundu — under Section 248(7) of the Companies Act, 2013, which preserves director liability even after company dissolution.
  • Alleged violations: Regulations 3(a), (b), (c), (d), 4(1), and 4(2)(a) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003.
  • Adjudicating Officer Mr. N Hariharan was appointed on August 17, 2022.

Regulatory Changes

No new regulatory changes are introduced. This order reinforces the application of Section 248(7) of the Companies Act, 2013, which allows SEBI to enforce liabilities against directors and officers of dissolved companies, establishing a precedent for pursuing individual accountability after corporate dissolution.

Compliance Requirements

  • Directors and officers of companies must ensure their firms do not engage in reversal trades or any practices that create artificial volumes in securities markets.
  • Even after a company is dissolved, directors remain personally liable for regulatory violations committed during their tenure.
  • Entities must comply with PFUTP Regulations 3(a), (b), (c), (d), 4(1), and 4(2)(a) prohibiting fraudulent and unfair trade practices.

Important Dates

  • April 1, 2014 – September 30, 2015: Investigation period for illiquid stock options trading at BSE.
  • February 25, 2022: Earlier adjudication order passed against ATPL (disposed of due to company dissolution).
  • August 17, 2022: Appointment of Adjudicating Officer Mr. N Hariharan for proceedings against individual directors.
  • 2026-27: Current adjudication order number Order/AK/DS/2026-27/32355-32356 issued.

Impact Assessment

This order has limited direct market impact as it concerns historical trading activity (2014–2015) by a now-dissolved entity. However, it carries significant regulatory precedent value by demonstrating SEBI’s ability and willingness to pursue individual directors for market manipulation even after the dissolution of the offending company. This reinforces personal accountability for directors in market manipulation cases and may act as a deterrent against fraudulent trading practices. The case highlights SEBI’s use of Section 248(7) of the Companies Act, 2013 as a tool to enforce securities law violations beyond corporate dissolution.

Impact Justification

Enforcement action against individual directors of a dissolved company for historical market manipulation in illiquid stock options; significant for precedent on director liability post-dissolution but limited direct market impact today.