The Securities and Exchange Board of India (SEBI) has taken decisive action against two market operators—Shivprasad Pattiya and Alkesh Narware—for orchestrating a fraudulent scheme that misled investors and manipulated illiquid stock options. The regulator has barred both individuals from accessing the securities market for three years and ordered them to return ₹4.83 crore along with 12% interest from February 1, 2022, within 45 days.
🔍 The Modus Operandi: Algo Trading Scam
SEBI’s investigation revealed that the duo employed callers to lure investors with promises of guaranteed profits through algo/software-based trading. After gaining the investors’ trust, they obtained login credentials and executed trades in illiquid ‘Out of the Money’ (OTM) stock options, deliberately placing buy and sell orders to transfer premiums from investor accounts to their own front entities.
“The trades were structured to match in quantity and price, ensuring the transfer of funds from unsuspecting investors to the operators’ entities,” SEBI noted in its order.
⚖️ Penalties and Restrictions
- Penalty: ₹25 lakh each under Section 15HA of the SEBI Act, 1992
- Market Ban: 3-year prohibition from buying, selling, or dealing in securities
- Asset Freeze: Operators barred from selling any assets, including mutual funds and demat holdings, except for disgorgement purposes
📉 Investor Complaints and NSE Alerts
The crackdown followed multiple complaints to the National Stock Exchange (NSE) and SEBI alerts regarding suspicious trades in OTM options. Victims reported losses amounting to lakhs after sharing credentials with WhatsApp groups promoting automated trading systems.
🛡️ SEBI’s Message to Market Participants
This enforcement action underscores SEBI’s commitment to protecting retail investors and maintaining market integrity. The regulator has urged investors to remain cautious of unsolicited trading advice and to avoid sharing sensitive account information.
Stay tuned for more updates on regulatory actions and market compliance.
