Authority: Adjudicating Officer, Securities and Exchange Board of India (SEBI)

Order Date: July 15, 2026

Case Overview

The Securities and Exchange Board of India (SEBI) initiated adjudication proceedings against Jitendra Kumar Nahta HUF (PAN: AAEHJ2046M) for alleged violations in the illiquid stock options segment of the Bombay Stock Exchange (BSE). The investigation period covered April 1, 2014, to September 30, 2015 (IP). SEBI's investigation found that 81.40% of all trades executed in the stock options segment during this period (2,91,744 trades) were non-genuine, creating artificial volumes.

The Noticee was specifically alleged to have executed 6 non-genuine reversal trades in 3 stock options contracts, generating an artificial volume of 58,000 units. These trades 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 Relating to Securities Market) Regulations, 2003 (PFUTP Regulations).

A Show Cause Notice (SCN) was issued on August 4, 2022 (EAD/EAD-4/GR/BM/35776/2022). The Noticee submitted a reply on September 13, 2022, and was granted a personal hearing on June 30, 2026. The Noticee contested the allegations, arguing that the trades were executed in the normal course of business through SEBI-authorized brokers, were unintentional, and that there was no prior meeting of minds with counterparties. The Noticee also raised concerns about inordinate delay in proceedings, as the SCN was issued more than 7 years after the trades occurred.

The Adjudicating Officer examined the trade logs, which showed the Noticee executed 100% of the total trades in two specific contracts:

  • AMBC14JUN200.00CEW2: 12,000 units bought at ₹33 and sold at ₹42.8
  • CANB14JUN420.00CEW2: 9,000 units bought at ₹52 and sold at ₹69

A detailed trade log for contract AMBC14JUN200.00CEW2 showed:

  • On June 9, 2014, at 14:45:25, the Noticee bought 12,000 units from Swastika Finlease Limited at ₹33
  • On the same day at 14:46:36, the Noticee sold 12,000 units to Swastika Finlease Limited at ₹42.9

The AO found that these reversal trades with the same counterparty within minutes at significantly different prices indicated a prior meeting of minds and lacked commercial rationale. The AO relied on Supreme Court judgments in SEBI Vs Bhavesh Pabari (2019), SEBI v Kishore R Ajmera (2016), and SEBI v Rakhi Trading Private Limited (2018), which established that synchronized trading and reversal transactions indicate manipulative practices affecting market integrity, even without direct evidence of connection between parties.

The AO rejected the Noticee's defense arguments, including claims of unintentional trading, lack of warning from BSE, and delay in proceedings, finding that no prejudice was caused as all relevant documents were provided with the SCN.

Final Outcome

The Adjudicating Officer found the Noticee guilty of violating Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a) of the PFUTP Regulations. Under Section 15HA of the SEBI Act, 1992, a penalty of ₹5,00,000 (Five Lakh Rupees) was imposed. The penalty must be paid within 45 days of receipt of the order, failing which SEBI may initiate recovery proceedings under Section 28A of the SEBI Act.

Topics: SEBI Enforcement, Market Manipulation, Options Trading