A Deep Dive into Market Manipulation and the Mechanics of Fraudulent Trading in Quasar India Limited
Order No.: Order/AK/DS/2025-26/31761-31780
Date: 2025
Authority: Adjudicating Officer, Securities and Exchange Board of India (SEBI)
Provisions Invoked: Section 15-I of the SEBI Act, 1992 read with Rule 5 of the SEBI (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995
1. Introduction
In yet another significant action against market abuse, the Securities and Exchange Board of India (SEBI) passed an Adjudication Order against Chandrima Mercantiles Limited and 19 other noticees for their alleged involvement in price and volume manipulation in the scrip of Quasar India Limited. The order exposes a well-coordinated web of trades aimed at creating a false market and artificial liquidity, misleading retail investors and distorting fair price discovery in the securities market.
The investigation covered the period between May 1, 2022, and December 31, 2023, during which SEBI’s surveillance system flagged unusual price and volume movements in Quasar India’s stock. Upon scrutiny, it was revealed that a group of 18 connected entities had colluded to artificially inflate the trading volume and price, thereby violating the SEBI Act, 1992 and the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulations, 2003.
2. Background and Appointment of the Adjudicating Officer
Following the findings of SEBI’s investigation, proceedings were initiated under Section 15-I(1) of the SEBI Act and Rule 3 of the SEBI (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995. The Adjudicating Officer (AO) was appointed by SEBI’s order dated December 10, 2024, to inquire into and adjudge violations under Sections 15HA and 15A(a) of the SEBI Act.
The key respondents included:
- M/s Chandrima Mercantiles Limited – the principal entity under investigation.
- Mr. Pranav Kamleshkumar Trivedi – Managing Director and CFO of Chandrima Mercantiles Limited.
- A host of connected individuals and entities (Noticees 3–20), allegedly operating in concert.
3. The Allegations: Collusion and Market Manipulation
According to SEBI’s Show Cause Notice (SCN) dated January 29, 2025, the investigation uncovered a nexus of 18 interconnected entities who together engineered artificial trading volumes and price escalation in Quasar India Limited’s shares.
Key findings included:
- The network of entities traded heavily among themselves, often executing circular trades without change in beneficial ownership.
- 8 of these entities became public shareholders holding over 1% of Quasar’s equity, while others acted as accomplices enabling the manipulation.
- The manipulation culminated in a sharp and unexplained rise in Quasar’s share price, followed by an orchestrated exit, where the entities offloaded their holdings to unsuspecting investors.
Notably, SEBI found that Mr. Pranav Trivedi (Noticee 2), along with Mr. Mrugesh Ruparel (Noticee 19) and Mr. Arpit Shah (Noticee 20), operated the trading and banking accounts of several of the 18 suspected entities. This common control suggested coordinated trading activity and manipulation of market dynamics.
4. The Regulatory Violations
The alleged conduct constituted violations of:
- Section 12A(a), (b), (c) of the SEBI Act, 1992; and
- Regulations 3(a), (b), (c), (d), 4(1), 4(2)(a), (b), (e), (g), and (n) of the PFUTP Regulations, 2003.
Additionally, Noticees 19 and 20 were charged under Section 11C(3) of the SEBI Act for failing to appear for statement recording, thereby obstructing the investigation.
5. Responses and Defenses by the Noticees
Of the 20 Noticees, only Chandrima Mercantiles Limited and Mr. Pranav Trivedi filed written submissions and appeared for a personal hearing.
Their defenses included:
- Lack of materiality: The trades by Chandrima and Trivedi represented less than 1.3% of the market volume, which, they argued, could not have influenced the scrip’s price.
- No collusion: The trades were said to be independent and opportunistic, based on market liquidity and not coordinated with any other participant.
- Absence of evidence: They contended that SEBI failed to establish any direct nexus or communication among the counterparties.
- Business justification: Some fund transfers to related firms were claimed to be genuine business transactions linked to agricultural trading.
They also challenged SEBI’s reliance on IP address and geo-location data, arguing that tower coverage in cities like Ahmedabad was broad and could not conclusively determine the source of trades.
6. Non-Cooperation by Other Noticees
Despite SEBI’s efforts — including service of SCNs via registered post, email, affixture, and public notice — the majority of Noticees (Nos. 3 to 20) failed to respond or appear. Citing precedents such as Classic Credit Ltd. v. SEBI (SAT, 2006) and Sanjay Kumar Tayal v. SEBI (SAT, 2014), the Adjudicating Officer observed that the absence of response implied admission of charges, allowing the case to proceed ex-parte against them.
7. SEBI’s Analytical Findings
The investigation divided the period into three patches to study trading patterns:
Patch 1: May 2022 – March 2023
- The entities, led by Chandrima Mercantiles, accounted for over 75% of buy volume in Quasar’s shares, while engaging in negligible sales.
- The trading pattern showed consistent purchases at rising prices, creating an illusion of strong demand.
- The company’s positive Last Traded Price (LTP) contribution of ₹2.37 indicated clear intent to push prices upward.
Patch 2: March 2023 – May 2023
- During this phase, the scrip’s price soared from ₹8.65 to ₹42.36, a nearly 400% increase.
- SEBI identified circular trades among the 18 entities, with up to 97% of total daily volume on certain days originating from these accounts.
- The pattern reflected cross-trades and synchronized orders, a hallmark of manipulation.
- Chandrima Mercantiles alone contributed to 3.46% of buy and 1.89% of sell volume — significant relative to market size.
Patch 3: June 2023 – December 2023
- The entities began offloading shares at inflated prices.
- Profits estimated at ₹1.96 crore were realized, while the scrip’s price eventually fell, leaving retail investors with losses.
8. Evidence of Connection Among Entities
SEBI traced a web of interconnections through:
- Common addresses, mobile numbers, and email IDs in KYC documents.
- Bank accounts opened in the same branches of IDBI and Karur Vysya Bank.
- Shared IP addresses and geo-location overlaps during trading and internet banking activities.
- Financial linkages through fund transfers, especially involving Noticee 2 (Trivedi) and Noticee 19 (Ruparel), who acted as coordinators.
These findings established mutual association and concerted intent among the Noticees, satisfying the criteria of “acting in concert” under the PFUTP framework.
9. SEBI’s Legal Reasoning
The Adjudicating Officer observed that:
- The pattern of trading, combined with the price–volume correlation, clearly pointed to fraudulent conduct under Regulations 3 and 4 of PFUTP Regulations.
- The transactions were not undertaken for genuine investment, but rather to create a misleading appearance of liquidity and demand.
- By executing non-genuine trades and manipulating market perception, the Noticees violated the integrity and fairness of the securities market.
- The role of Chandrima Mercantiles and Mr. Trivedi as orchestrators of the scheme was established through evidence of control and fund flow.
10. Determination of Liability and Penalty
Given the scale and gravity of the manipulation, SEBI invoked Section 15HA (for fraudulent and unfair trade practices) and Section 15A(a) (for failure to cooperate with investigation) of the SEBI Act.
While the detailed quantum of penalty is not reproduced here, such offenses typically attract monetary penalties up to ₹25 crore or three times the profits made, whichever is higher, along with debarment from accessing the securities market.
11. Broader Implications and Regulatory Message
This case underscores SEBI’s continuing vigilance over low-cap and SME stocks, which are often soft targets for price rigging due to limited liquidity and public float.
The Chandrima Mercantiles–Quasar India case demonstrates the regulator’s deep forensic capabilities — including digital footprint tracking, KYC link analysis, and trade pattern reconstruction — to expose collusive behavior and circular trading schemes.
The order also sends a strong message that even marginal percentage contributions to market volume, when executed in a manipulative manner, can constitute a violation of securities law.
12. Conclusion
The SEBI Adjudication Order in Chandrima Mercantiles Limited & Ors. (Quasar India Limited case) represents a landmark in the fight against coordinated trading cartels. It reinforces the principle that the integrity of the securities market is paramount, and even smaller listed entities cannot escape accountability for deceptive conduct.
The case exemplifies how price manipulation in low-volume scrips can have cascading effects on investor confidence. SEBI’s decisive approach — combining data analytics, legal rigor, and forensic evidence — continues to set a benchmark for securities law enforcement in India.
Citation
Case Title: Adjudication Order in the matter of price and volume manipulation in the scrip of Quasar India Limited
Primary Noticees: Chandrima Mercantiles Limited, Pranav Kamleshkumar Trivedi, and others
Order No.: Order/AK/DS/2025-26/31761-31780
Authority: Securities and Exchange Board of India