SEBI impounds Rs 3.67 crore in SENSEX expiry auction manipulation

The Enforcement Action

The Securities and Exchange Board of India (SEBI) has passed an ex-parte interim order impounding a total of ₹3,67,80,773 from two market entities it says manipulated the closing level of the BSE SENSEX during the exchange's new Closing Auction Session on a weekly expiry day. The order, bearing reference WTM/KV/ISD/ISD-SEC-6/32673/2026-27 and dated 19 August 2026, was passed by Whole Time Member Kamlesh Chandra Varshney under sections 11(1), 11(4) and 11B(1) read with section 19 of the SEBI Act, 1992.

The two noticees named in the order are Copthall Mauritius Investment Limited (PAN AAACC4303M), a foreign portfolio investor, and Mansi Share and Stock Broking Private Limited (PAN AADCM6645D), a SEBI-registered stock broker. SEBI has directed that ₹2,96,16,000 be impounded from Copthall and ₹71,64,773 from Mansi, restrained both from the securities market, and specifically barred them from participating in the Call Auction Session in the equity segment until further orders. In Mansi's case the restraint applies to its proprietary trading account only, so client business continues.

SEBI describes the findings as prima facie and pending further examination. The order is an interim measure, not a final adjudication, and the noticees have been given 21 days to file their reply or objections and to seek a personal hearing. Neither entity had publicly responded to the order at the time of writing.

How the Scheme Worked

The Closing Auction Session, or CAS, is a mechanism SEBI introduced through a circular dated 16 January 2026, effective from 3 August 2026. Under it, normal cash-segment trading in covered scrips halts at 15:15, a reference price is computed between 15:15 and 15:20, and a call auction then runs from 15:20 to 15:30 within a price band of plus or minus 3% of the reference price. Crucially, on a derivatives expiry day the settlement price of index options is based on the index close discovered through this auction, so the CAS level directly decides which options pay out.

According to the order, 13 August 2026 was a SENSEX weekly options expiry. The reference price at 15:15 was 77,829.6, but SEBI surveillance noted abnormal spikes in the Indicative Equilibrium Price during the auction, with the SENSEX eventually closing at 78,079.96 (rounded to 78,080). The order records three sharp spikes: the index moved up 362.02 points in a two-second window (15:20:41 to 15:20:43), a further 132.67 points between 15:24:08 and 15:24:20, and 405.08 points between 15:25:49 and 15:26:17.

SEBI found that Copthall alone accounted for 86.6% of the gross buy value in SENSEX constituents during the auction, buying roughly ₹191.29 crore worth of shares. The order states this concentrated buying pushed the indicative index higher during the spikes. SEBI assessed a fair settlement level of about 77,840, derived from the Nifty 50's movement that day, against the actual close of 78,080, and attributed the difference to prima facie manipulation. Because Copthall held large expiry-day option positions, the order calculates that lifting the close produced additional option profits and let it avoid payouts on put options that then expired worthless, quantifying its wrongful gain at ₹2,96,16,000.

Mansi's alleged role, per the order, ran the other way for part of the session. SEBI says Mansi placed sell orders below the reference price to suppress the indicative index during a drawdown between 15:21:03 and 15:26:00, then cancelled those sell orders, so that put options it had sold expired worthless. SEBI treats the sale value of those puts as wrongful gain and adds a squared-off difference on additional expiry-day puts, arriving at ₹71,64,773 for Mansi. The order notes the examination followed SEBI's daily surveillance of the newly launched CAS.

The Law Invoked

The order records that the conduct is prima facie in violation of section 12A(a), (b) and (c) of the SEBI Act, 1992, which prohibit the use of any manipulative or deceptive device, and dealing in securities in a fraudulent manner, in connection with securities listed on a recognised exchange.

SEBI also cites regulations 3(a), (b), (c) and (d) and regulations 4(1), 4(2)(a), (b), (d), (e) and (g) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Markets) Regulations, 2003. Regulation 3 bars dealing in securities through fraudulent or manipulative means, while regulation 4 lists specific manipulative practices, including trades that create a false or misleading appearance of price and orders placed without an intention to trade.

The impounding and market restraint themselves flow from sections 11(1), 11(4) and 11B(1) read with section 19 of the SEBI Act, which empower SEBI to act in the interest of investors and the market, including pending investigation. The order records these are the provisions engaged; it does not make any finding under penalty provisions, expressly reserving SEBI's right to levy penalties separately.

What Happens Next

An ex-parte interim order is a first step, not a conclusion. SEBI has directed the two entities to open fixed-deposit accounts with a lien in its favour to hold the impounded sums, to furnish a full inventory of assets within 15 days, and to square off any open exchange-traded derivative positions within three months or at contract expiry, whichever is earlier. The market and cash restraints ease once the impounding amount is credited.

The noticees may file objections within 21 days and seek a personal hearing, after which SEBI will pass further orders. SEBI has also flagged that a detailed investigation will follow and may extend to other suspects not named in this order. Any party aggrieved by a SEBI order can appeal to the Securities Appellate Tribunal, and thereafter to the Supreme Court on a question of law. Until that process runs its course, the findings remain prima facie and subject to the noticees' response.

What It Means

For ordinary investors, the significance is less about the two named entities and more about what the order signals: SEBI is watching the new closing-auction mechanism closely, and it says the auction gives it a sharper view of manipulation than the old volume-weighted average price method. On an index expiry, the closing print decides the settlement value of every SENSEX option, so a distorted close can quietly transfer money between option writers and buyers across the whole market, not just the manipulating account.

The practical takeaway is verification and awareness rather than alarm. Investors can confirm that any intermediary they deal with is registered by checking SEBI's public register of brokers and portfolio managers on sebi.gov.in, and can treat unusually sharp, thinly-explained moves in the final trading minutes with caution rather than as a signal to chase. For most long-term investors holding shares or mutual funds, an expiry-day auction spike has no bearing on the underlying value of what they own; it matters chiefly to those settling derivative positions that day.

FAQ

Has SEBI found the named entities guilty of manipulation?

No. The order sets out SEBI's prima facie findings in an ex-parte interim order, not a final verdict. The noticees have 21 days to file objections and seek a personal hearing, and any final SEBI order can be appealed to the Securities Appellate Tribunal. Until those proceedings conclude, the observations are allegations tested through due process, not proven findings of guilt.

What exactly did SEBI order?

SEBI impounded ₹2,96,16,000 from Copthall Mauritius Investment Limited and ₹71,64,773 from Mansi Share and Stock Broking Private Limited, a total of ₹3,67,80,773, to be held in lien-marked fixed deposits. It restrained both from the securities market, barred them from the Call Auction Session, and directed an asset inventory within 15 days.

Can the order be appealed?

Yes. A SEBI order of this kind is appealable to the Securities Appellate Tribunal, and a further appeal on a question of law lies to the Supreme Court. Separately, the noticees can file replies and objections directly with SEBI within 21 days, after which SEBI may confirm, vary or revoke the interim directions.

What is the Closing Auction Session?

The CAS is a call auction that SEBI introduced from 3 August 2026 to determine the closing price of stocks on which derivatives are available. It runs from 15:20 to 15:30 within a 3% price band. On expiry days the index close discovered in this auction becomes the settlement price for index options, which is why its integrity matters.

How can I check if my broker is registered with SEBI?

SEBI maintains public registers of registered intermediaries, including stock brokers and portfolio managers, on its website sebi.gov.in. You can search by name or registration number to confirm an entity's status and see any orders against it before opening or continuing an account.

Where can I read the official order?

The full ex-parte interim order dated 19 August 2026 is published in the enforcement orders section of SEBI's website, sebi.gov.in, under the matter of manipulative trades during CAS on SENSEX expiry at BSE.

This report is based on the official SEBI ex-parte interim order dated 19 August 2026 in the matter of manipulative trades during CAS on SENSEX expiry at BSE, passed by SEBI Whole Time Member Kamlesh Chandra Varshney.