Description

SEBI adjudication order imposing penalty on Vanchhit Distributors Private Limited (formerly Exon Distributors Pvt Ltd) for executing non-genuine reversal trades in illiquid stock options at BSE during April 2014 to September 2015, in violation of PFUTP Regulations 2003.

Summary

SEBI’s Adjudicating Officer issued Order No. Order/AK/DS/2026-27/32397 against Vanchhit Distributors Private Limited (PAN: AACCE8604K), previously known as Exon Distributors Private Limited, for participating in large-scale reversal trades in the illiquid stock options segment of BSE. The investigation covered the period April 1, 2014 to September 30, 2015, during which 2,91,744 trades—constituting 81.40% of all BSE stock options trades—were found to be non-genuine.

Key Points

  • Noticee traded in illiquid stock options at BSE during the investigation period (April 1, 2014 – September 30, 2015)
  • 2,91,744 trades (81.40% of total BSE stock options trades) during the IP were identified as non-genuine reversal trades
  • These trades created artificial volumes and false or misleading appearance of trading activity
  • The company was formerly known as Exon Distributors Private Limited and was subsequently renamed Vanchhit Distributors Private Limited
  • Show Cause Notice issued on August 06, 2022 for alleged violations of PFUTP Regulations 2003
  • Ms. Soma Majumder was originally appointed as Adjudicating Officer; the undersigned was appointed on April 03, 2025 following a transfer

Regulatory Changes

No new regulatory changes introduced. This order pertains to enforcement of existing provisions under:

  • Regulations 3(a), (b), (c), (d) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003
  • Regulations 4(1) and 4(2)(a) of PFUTP Regulations, 2003
  • Section 15HA of SEBI Act, 1992 (penalty provision)

Compliance Requirements

  • The Noticee (Vanchhit Distributors Private Limited) is subject to penalty as determined under Section 15HA of the SEBI Act, 1992
  • Market participants are reminded that reversal trades designed to create artificial volumes in stock options constitute fraudulent and unfair trade practices under PFUTP Regulations, 2003
  • Entities involved in illiquid stock options trading must ensure all trades are genuine and do not result in false or misleading price/volume signals

Important Dates

  • Investigation Period: April 1, 2014 – September 30, 2015
  • Show Cause Notice issued: August 06, 2022
  • Undersigned appointed as Adjudicating Officer: April 03, 2025
  • Order issued: April 2026 (Order No. Order/AK/DS/2026-27/32397)

Impact Assessment

This is a targeted enforcement action with limited broader market impact. The order concludes a long-running adjudication proceeding (SCN issued in 2022 for conduct during 2014–2015) against one entity. It reinforces SEBI’s continued pursuit of historical illiquid stock options manipulation cases at BSE, signalling that enforcement actions from the large-scale BSE stock options manipulation investigation remain ongoing. No systemic or forward-looking market impact is expected.

Impact Justification

Routine enforcement action against a single entity for historical market manipulation in illiquid stock options; no prospective regulatory changes or broad market impact.