SEBI Imposes Rs 50 Lakh Fine, Bars Two for 3 Years and Orders Rs 4.83 Crore Return in Stock Options Scam
SEBI penalises Shivprasad Pattiya and Alkesh Narware Rs 25 lakh each, bars them from markets for 3 years, and directs return of Rs 4.83 crore (plus 12% interest) for their role in fraudulent out-of-the-money stock options trading
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The Securities and Exchange Board of India (SEBI) has levied a ₹50 lakh penalty—₹25 lakh each—on traders Shivprasad Pattiya and Alkesh Narware for orchestrating a major stock options fraud. Both have been barred from accessing or dealing in the securities market for three years and must return ₹4.83 crore in illicit gains, with a cumulative 12% annual interest from February 1, 2022.
Pattiya and Narware led a “caller group” that convinced investors, via persistent calls and WhatsApp messages, to share trading credentials under the promise of “guaranteed returns” through algorithmic (algo) or software-based trades.
The operators created artificial volume in illiquid, out-of-the-money (OTM) stock options, executing buy orders through investor accounts and reciprocal sell orders via front entities controlled by them. This maneuver transferred the entire premium from investors to the fraudsters.
Investigations, initiated after alerts and investor complaints to the NSE, confirmed that trades were artificially structured to benefit Pattiya and Narware at the expense of unsuspecting individuals.
Penalties & Restrictions:
Penalty: Rs 25 lakh fine each under Section 15HA of the SEBI Act.
Market ban: Prohibited from market activities—buying, selling, or associating with market entities—for three years.
Disgorgement: Rs 4.83 crore must be repaid within 45 days, along with 12% simple interest from February 1, 2022.
Asset freeze: SEBI has frozen their assets—including securities and mutual fund holdings—preventing sales except to fulfill the disgorgement order.
SEBI’s Quasi‑Judicial Authority, N. Murugan, stated that "the sequence of events … clearly establishes that the Operator Group masterminded the entire scheme," describing it as a deliberate, manipulative design to deceive investors.
Regulators are increasingly clamping down on fraudulent practices using algorithm‑based trading schemes, especially those targeting retail investors with unrealistic profit promises. This SEBI action reinforces the need for investors to remain cautious, verify offers, and avoid sharing credentials.
