Fake Buy, Sell Order To Inflate Stock Prices: How This Broker 'Spoofed' Markets

The Securities and Exchange Board of India (SEBI) has issued an ex parte interim order against Patel Wealth Advisors Pvt. Ltd. (PWAPL) and its directors after uncovering widespread 'spoofing' activities between January 2022 and January 2025.

Spoofing refers to the manipulative practice of placing large buy or sell orders without any real intention to execute them. This creates a false sense of demand or supply, deceiving other investors into trading at artificial prices.

How The Broker Manipulated Prices
According to SEBI, PWAPL, a registered stockbroker, placed large fully disclosed orders significantly above or below the market price, creating a misleading picture of heavy demand or supply in various scrips. While these massive orders sat in the system, PWAPL executed small, real trades on the opposite side of the market, profiting from price movements their fake orders triggered.

Once the real trades were completed, PWAPL swiftly cancelled the large fake orders. This method was repeated over 292 scrip contract days across 173 different stocks, creating significant disruption in market integrity​.

Real Case Examples: Coffee Day and Syrma SGS
SEBI’s investigation highlighted two illustrative cases:
In the scrip of Coffee Day Enterprises Ltd on September 14, 2022, PWAPL placed huge fake buy orders, executed sell trades at inflated prices, and later canceled the fake orders, making around Rs 9 lakh in illegal gains​.
A similar pattern was seen in Syrma SGS Technology Ltd on August 29, 2022, where PWAPL made approximately Rs 4.44 lakh​.

Across all the trades analyzed, PWAPL made unlawful profits of Rs 3.22 crore​.
 

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Legal Violations And SEBI’s Observations
Though the term 'spoofing' isn't explicitly mentioned in Indian law, SEBI clarified that these acts fall under fraudulent and unfair trade practices prohibited by Regulation 3 and 4 of the PFUTP Regulations.

 "The practice wherein large quantities of buy/sell orders were placed, followed by executing trades in smaller quantities on the opposite side, and then cancelling the earlier orders, was nothing but a deliberate chain of acts done only for spoofing of the order book", SEBI stated​.
 

In another pointed remark, SEBI added, "By manipulating market dynamics through this tactic, spoofers can effectively buy at lower prices and sell at higher prices (or vice versa), profiting from the artificial price movements they have induced"​.

Interim Action: Market Ban
Until the investigation concludes, SEBI has banned PWAPL and its directors — Denish Maheshbhai Patel, Mitul Umedlal Vora, Kaushal Vasantrai Patel, and Minish Maheshbhai Patel — from buying, selling, or dealing in securities​.

Further action, including recovery of illegal profits and penalties, will be considered after a full hearing.