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Informist, Monday, Jun. 23, 2025

 

NEW DELHI – The Securities and Exchange Board of India Friday issued an order against two market operators –  Shivprasad Pattiya and Alkesh Narware – for illegally profiting INR 48.3 million from manipulation of trades in stock options contracts in the equity derivatives segment of the National Stock Exchange of India during January 2021 to February 2022. The market regulator ordered disgorgement of the illegal profit, along with 12% annual interest from Feb. 1, 2022, against the two operators. In its order, SEBI also barred them from all securities market activities for three years and imposed a penalty of INR 2.5 million each on them.

 

In the fraudulent scheme run jointly by the two operators, 'out of the money' stock options sale orders were first placed at premiums far higher than the prevailing premium prices and then immediately matched by purchase orders. For sell trades, the operators used the trading accounts of individuals who were paid money for control over their trading and bank account credentials. These, according to SEBI, were the front entities of the operators in the fraudulent scheme.

 

For buy trades, the operators, using investor groups on Whatsapp, got hold of trading accounts of another set of investors who shared the credentials of their funded trading accounts on the lure of substantial profits from algorithmic trading. This set of unsuspecting investors stood to lose their premiums traded and were the complainants to NSE and SEBI. SEBI initiated its investigation based on these complaints as well as on a surveillance alert received by it regarding out of the money stock options trades with extreme premium price variation without corresponding movement in underlying shares.

 

According to SEBI, sell orders in specific call or put options contracts were placed through the trading accounts of the front entities, and were systematically priced at high premiums. "These trades were executed with the clear objective of transferring credit balances from the trading accounts of complainants to those of the front entities. The premium paid from the accounts of complainants, acting as counterparties to these trades, became the gain to the accounts of front entities," SEBI said. The manipulative trades were largely in call and put options contracts of Tata Power Ltd., Bharat Heavy Electricals Ltd., REC Ltd., IDFC First Bank Ltd., Federal Bank Ltd., Coal India Ltd., Indian Oil Corp Ltd., and others.  End

 

Reported by Rajesh Gajra

Edited by Avishek Dutta

 

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