India’s First Major Stock Market Spoofing Case: SEBI Takes Action Against Broker Involved in 173 Stocks

In a significant move to safeguard market integrity, the Securities and Exchange Board of India (SEBI) has directed Patel Wealth Advisors Pvt Ltd (PWAPL) and its associates to return over ₹3.22 crore in illegal gains. This follows an extensive investigation into large-scale “spoofing” practices, a manipulative trading tactic previously seen in limited instances in Indian markets.

SEBI’s order, issued on April 28, 2025, also imposes a ban on PWAPL from accessing the securities market through its proprietary account. Furthermore, the company’s directors have been restrained from participating in the securities market altogether.

What is Spoofing and How Was It Used?

Spoofing involves placing large orders at prices far from the prevailing market rate, creating a misleading appearance of demand or supply. These orders, known as phantom orders, are not intended for execution but are used to mislead other investors into believing a genuine rally or fall is underway.

SEBI’s Whole-time Member, Kamlesh Varshney, described the tactic: “Order spoofing is a type of manipulative trading activity which involves placing bid or ask orders, with the intent of cancelling the said orders before execution while simultaneously executing trades on the opposite side of the book.”

By artificially skewing the order book, spoofers influence investor behaviour and exploit the resulting price movements for their own profit.

Scale and Impact of the PWAPL Spoofing Case

The investigation revealed that PWAPL engaged in spoofing across 173 scrips on 292 trading days, sometimes orchestrating multiple instances within a single day. In total, 621 unique spoofing instances were identified.

Unlike previous cases, such as the 2023 incident involving Nimi Enterprises which was restricted to the cash segment over eight months, PWAPL’s activities spanned both cash and derivatives markets and continued for three years — a first-of-its-kind scale observed in India.

Why SEBI Issued an Interim Order

Highlighting the seriousness of the misconduct, Varshney stressed that allowing PWAPL to continue its practices would undermine the very fabric of market integrity and harm investors.

He noted: “The order spoofing is a manipulative, fraudulent and unfair trade practice employed by PWAPL to deceive other market participants and profit from price fluctuation they induced unwary investors in the market. This practice distorted market prices and undermined market efficiency.”

Read More: SEBI Fines OPG Securities ₹5.2 Crore in NSE Co-location Matter

Conclusion 

The interim measures, therefore, aim to immediately halt any further risk to the market and uphold the fairness and transparency expected of India’s securities ecosystem.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

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