Case Overview

The adjudication proceedings were initiated by SEBI against Dilip Kumar Gupta HUF (PAN: AADHD8826N) following an investigation into large-scale reversal trades in the illiquid stock options segment of the Bombay Stock Exchange (BSE). The investigation period covered April 1, 2014, to September 30, 2015.

SEBI's investigation found that 2,91,744 trades, constituting 81.40% of all trades in the BSE stock options segment during this period, were non-genuine. These trades created artificial volume, presenting a false and misleading appearance of trading activity.

The Noticee was specifically alleged to have executed 3 reversal trades in 1 contract, generating an artificial volume of 96,000 units. These actions were alleged to violate Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003 (PFUTP Regulations).

A Show Cause Notice (SCN No. SEBI/HO/IVD/ID16/P/OW/2022/14222/1) was issued on March 31, 2022. The case saw multiple transfers between Adjudicating Officers, with the final assignment to the current officer on June 1, 2026.

During the proceedings, it was revealed that Mr. Dilip Kumar Gupta, who was managing the HUF's affairs, passed away on February 27, 2022. Subsequently, Mr. Rahul Gupta, his son, communicated that the HUF had been partitioned. Documentation provided included a partition deed dated June 7, 2022, and an application filed under Section 171 of the Income Tax Act, 1961, confirming that all assets were divided among coparceners and the HUF ceased to exist as a legal entity from that date.

Final Outcome

The Adjudicating Officer concluded that since Dilip Kumar Gupta HUF had legally ceased to exist due to the partition on June 7, 2022, the adjudication proceedings against it had become infructuous. The proceedings initiated vide the SCN dated March 31, 2022, were therefore disposed of without imposing any penalty. A copy of the order was sent to SEBI and Mr. Rahul Gupta.

Topics: SEBI Enforcement, HUF Partition, Market Manipulation