Inside Rs 173 crore SEBI crackdown: How traders exploited CERC data to profit from IEX stock

The Sebi order, issued on October 15, says that there are evidences of confidential documents and communication relating to CERC recovered from the mobile phone of Bhoovan Singh. It also has evidence of Sanjeev Kumar watching live-streaming of the CERC meeting on July 15, 2025 from the adjoining room. Besides, there were frequent communications and meetings between officials of CERC and Bhoovan Singh and Sanjeev Kumar.

Inside info from CERC

On July 23, 2025, CERC issued an order for implementing market coupling. Market coupling involves the centralised matching of bids from various power exchanges to arrive at a uniform market clearing price. This move was aimed at achieving price convergence across different electricity markets and streamlining the process of price discovery. Currently each power exchange determines its price based on demand and supply.

With the new framework of market coupling, it was prima facie observed that IEX was expected to lose control over price discovery in the DAM (Day Ahead Market) segment due to market coupling and smaller exchanges like Power Exchange of India (PXIL) and Hindustan Power Exchange (HPX) getting access to some volume of trades. Accordingly, it was prima facie observed that the implementation of market coupling mechanism was expected to negatively affect trading volume on IEX in the DAM segment. Preliminary examination further revealed that there was a significant movement in the price and volume traded in the scrip of IEX on the next day after the CERC order i.e. on July 24, 2025, the Sebi order says.

The CERC order led to fall in prices in the scrip of IEX, and an increase in the volume of derivatives of PEs (put European options) was observed. Once the CERC order was made public on July 23, 2025, price of the scrip opened at Rs 169.10 and closed at Rs 132.32 on July 24, Sebi said.

Sebi notices insider trading

Sebi conducted a suo-motu preliminary examination after taking cognizance of the significant fall in price of shares in the scrip of Indian Energy Exchange following the announcement made by CERC on July 23, 2025 after-market hours. While the examination was being carried out, SEBI also received a complaint alleging insider trading in the scrip.

Humongous alleged ill-gotten gains have been made by noticees by executing trades with great precision and timing and at the cost of innocent investors who had no prior access about the impending fall in the price owing to the CERC order, the order said. “Immediate action is also required against Noticees to prevent the alleged ill-gotten gains from going beyond the regulatory reach. Part of the alleged ill-gotten gains has already been transferred to certain connected entities by Noticees. There is apprehension that the Noticees may further transfer the alleged ill-gotten gains,” Sebi Whole-time Member Kamlesh C Varshney said in his order dated October 15.

SEBI noted that the noticees had carried out very few trades before and after the period under review. However, their trading activity rose sharply during the time they had access to unpublished price-sensitive information (UPSI). This, SEBI said, clearly shows how their trading pattern was designed to take advantage of the expected fall in the share price of IEX. By doing so, they were able to multiply their profits significantly through put option trades, revealing a well-planned scheme to benefit from insider information.

The modus operandi involved sharing of crucial information relating to regulatory actions that emanated from a regulator (CERC) and which was bound to have severe impact on the listed securities of IEX. “Such actions create an information imbalance amongst investors, leaving them at a disadvantage due to their lack of access to the confidential information held by individuals who can have access to such information owing to their influential contacts,” it said.