The capital markets regulator has ordered that the alleged illegal gains of more than ₹173 crore be impounded from certain individuals after uncovering an insider trading scheme involving a Central Electricity Regulatory Commission (CERC) official and trading in the shares of Indian Energy Exchange Ltd (IEX).

The Securities and Exchange Board of India (Sebi) barred eight individuals from the securities market, according to an ex parte interim order issued on 15 October. The regulator instructed noticees to deposit the “ill-gotten gains” into interest-bearing fixed deposit accounts with a lien marked in Sebi’s favour.

All eight individuals are from two main family groups: the Soran family, which includes Bhoovan Singh, his parents Amar Jit Singh Soran and Amita Soran, and Amita’s sister Anita;​ and the Kumar family comprising brothers Narender Kumar, Virender Singh, and Sanjeev Kumar, along with Sanjeev’s wife Bindu Sharma.​

Sebi initiated the probe after a 29.58% plunge in IEX’s share price on 24 July. This crash followed an announcement made after the market hours by the CERC on 23 July regarding the implementation of “market coupling” or aggregating buy-sell orders from power exchanges. Sebi also received a formal complaint alleging insider trading in the company’s scrip.

Coordinated trading ring

The investigation revealed that these two families were connected through business interests, including joint directorships and shareholdings in companies like GNA Energy Pvt. Ltd and First Mile Technologies Pvt. Ltd.​

Sebi’s preliminary investigation paints a picture of a well-coordinated operation to profit from unpublished price-sensitive information (UPSI) leaked from within CERC.

The CERC’s decision to implement “market coupling”, which centralizes bid matching from all power exchanges to determine a uniform price, was expected to erode IEX’s dominant market position and negatively impact its trading volumes and revenue, making the information highly price-sensitive. The UPSI period was determined to be from 1 July 2025 to 23 July 2025, when the order was made public.

The investigation focused on Yogeita S. Mehra, chief of the economics division at CERC, as a key source of the leak. The CERC order on market coupling originated from her division.

Sebi found that Mehra had deep personal and family connections with Bhoovan Singh, one of the main accused, who was also an alumnus of a college where she had been a professor.

Evidence gathered during search and seizure operations, including deleted chats from messaging apps, revealed that Mehra routinely shared confidential CERC documents and internal discussion details with Bhoovan Singh.

Singh then disseminated this information to Sanjeev Kumar and Narender Kumar through a WhatsApp group named “OTC”. Sanjeev Kumar, being the CEO of a CERC-regulated entity, also had direct access and frequent communication with CERC officials.

Armed with this definitive information, the group took massive short positions by purchasing a large volume of IEX put options in the days leading up to the CERC announcement, particularly between July 21 and July 23.

A put option is a contract that gives the buyer the right, but not the obligation, to sell an asset at a pre-determined price by a specific date. The holder benefits if the price of an asset falls below that price.

For most of the accused in this case, this was their first-ever trade in the derivatives segment, indicating a high degree of certainty about the impending price fall.

As predicted, when the market coupling order was published, IEX’s stock price collapsed, and the accused squared off their positions, amassing a total profit of over ₹173 crore.

Sebi noted that part of these funds were subsequently transferred to connected companies. The investigation continues to examine the roles of other potential suspects.

Sebi has restrained all eight from buying, selling, or dealing in securities until further notice. Their bank and demat accounts have been frozen to the extent of the impounded amount, and they are prohibited from disposing of any assets without Sebi’s permission.