SEBI Imposes ₹5 Lakh Penalty on Trader for 'Non-Genuine' Illiquid Options Trades

SEBI Imposes ₹5 Lakh Penalty on Trader for 'Non-Genuine' Illiquid Options Trades​

The Securities and Exchange Board of India (SEBI) has finalized an adjudication order, imposing a penalty of ₹5,00,000 on Alka Dhanuka. The penalty was levied following findings that the individual indulged in manipulative and deceptive trading practices involving illiquid stock options at the Bombay Stock Exchange (BSE).

The order, dated May 15, 2026, pertains to alleged violations of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003. The case centers on transactions that created a false or misleading appearance of trading activity.

Background of Illiquid Stock Options Allegations​

The investigation period covered was from April 1, 2014, to September 30, 2015. SEBI had observed a pattern of large-scale reversals of trades in the stock options segment, suggesting artificial volume creation.

Specific attention was drawn to the trading activities of Alka Dhanuka. The noticee was alleged to have executed non-genuine reversal trades in illiquid stock options. These actions were deemed manipulative, resulting in the creation of false volumes.

Records indicate that the total alleged non-genuine trades executed by the noticee amounted to 9 non-genuine trades across 4 stock options contracts. This activity generated an artificial volume totaling 20,23,750 units during the specified period.

Adjudication Findings on Non-Genuine Trading​

During the hearing, the noticee's authorized representative attended and admitted the allegations detailed in the Show Cause Notice. The adjudicating officer found that the trades executed were not normal or genuine.

The analysis of the trading pattern revealed that the trades were structured in such a way as to indicate a prior meeting of minds. These trades were executed with the same counterparty and involved significant price variations within short spans of time.

The board relied on established judicial precedents, including judgments from the Supreme Court, to establish the element of 'meeting of minds.' These judgments stipulate that inference can be drawn from the totality of surrounding facts and circumstances surrounding the alleged manipulation.

Violation of Securities Market Regulations​

The adjudicating officer concluded that the trading behavior of the noticee clearly indicates a prior collusion between the noticee and the counterparty. These actions constituted a deliberate attempt to execute reversal trades at predetermined prices.

Consequently, the violation of multiple sections of the law was established. The noticee was found guilty of violating Regulations 3(a), (b), (c), (d), 4(1), and 4(2)(a) of the PFUTP Regulations. These provisions prohibit any form of fraudulent or unfair trade practices in the securities market.

Monetary Penalty and Compliance Requirements​

Given the findings of non-genuine trades and the resulting artificial volume creation, the violation was deemed a fit case for monetary penalty under Section 15HA of the SEBI Act.

The adjudication order formally imposes a penalty of ₹5,00,000 (Rupees Five Lakhs only) on Alka Dhanuka. The penalty amount is stated to be commensurate with the lapse and omission on the part of the noticee.

The noticee has 45 days from the receipt of the order to remit the penalty amount through the SEBI online payment facility. Failure to pay within this stipulated time may lead to further recovery proceedings under the SEBI Act.