In a significant move to uphold market integrity, India’s Securities and Exchange Board (SEBI) recently barred Rajkot-based stock broker Patel Wealth Advisors Private Limited (PWAPL) and four of its directors from participating in the securities market due to allegations of order spoofing.
This manipulative trading practice, which involves placing large orders with the intent to cancel them before execution to deceive other market participants, has drawn increasing scrutiny worldwide.
While India and other nations like South Korea are taking aggressive steps to curb such practices, retail investors in the United States continue to voice concerns over unchecked market irregularities, particularly in stocks like GameStop, AMC, and Trump Media & Technology Group (DJT).
Today we are going over the global fight against market manipulation, and why the U.S. regulatory framework appears to be lagging behind in protecting its retail investors.
SEBI’s Decisive Action Against Order Spoofing
On April 28, 2025, SEBI issued an interim order prohibiting PWAPL from trading in securities using its proprietary account and barred four current and former directors from any market dealings.
The regulator’s investigation revealed that PWAPL engaged in 621 unique instances of order spoofing across 173 stocks between January 2021 and January 2025, resulting in illicit gains of approximately ₹3.22 crore (around $383,000 USD).
SEBI’s findings detailed how PWAPL placed large orders at prices significantly above or below the prevailing market rates, creating a false impression of supply or demand.
These orders were promptly canceled after executing trades on the opposite side, manipulating stock prices and deceiving investors.
SEBI’s Whole-time Member Kamlesh Varshney described order spoofing as a “manipulative, fraudulent, and unfair trade practice” that distorts market prices and undermines investor confidence.
The regulator’s response included impounding the unlawful gains and launching a comprehensive investigation to further probe PWAPL’s activities.
This crackdown marks one of India’s most significant cases of spoofing, highlighting SEBI’s commitment to maintaining a fair and transparent market.
Global Efforts to Combat Market Manipulation
India is not alone in its aggressive stance against market manipulation.
South Korea has emerged as a leader in this space, implementing stringent measures to deter illegal trading practices.
In recent years, the Financial Services Commission (FSC) and the Korea Exchange (KRX) have intensified surveillance and enforcement actions, targeting short-selling abuses and market manipulation schemes.
For instance, in 2023, South Korea imposed a temporary ban on short selling to stabilize markets and protect retail investors from predatory practices.
The country’s regulators have also leveraged advanced technology, including artificial intelligence, to detect irregular trading patterns in real time.
South Korea’s proactive approach has yielded tangible results.
In 2024, the FSC fined several hedge funds and imposed trading bans on entities involved in manipulative practices, sending a clear message that market integrity is non-negotiable.
Retail investors in South Korea have benefited from these measures, with increased confidence in the fairness of the market.
This stands in stark contrast to the United States, where retail investors have grown increasingly frustrated with perceived regulatory inaction.
U.S. Retail Investors Demand Action
In the United States, retail investors have been vocal about market irregularities, particularly in high-profile cases involving GameStop, AMC, and Trump Media & Technology Group (DJT).
The 2021 GameStop saga, driven by retail investors on platforms like Reddit’s WallStreetBets, exposed vulnerabilities in the U.S. financial system, including potential manipulation through short-selling practices and order flow arrangements.
Despite widespread attention, the U.S. Securities and Exchange Commission (SEC) has been criticized for its slow response and failure to address systemic issues effectively.
Retail investors have pointed to suspicious trading patterns in GameStop and AMC, such as rapid price swings and high short interest, as evidence of market manipulation.
Similarly, Trump Media’s DJT stock has experienced volatile trading activity, with retail investors alleging that coordinated efforts by institutional players may be distorting prices.
Social media platforms, including X, have amplified these concerns, with users urging the SEC to investigate potential spoofing, front-running, and other manipulative practices.
Yet, the SEC’s enforcement actions have been limited, focusing on minor fines or settlements that critics argue do little to deter large-scale manipulation.
A 2023 report by the Financial Industry Regulatory Authority (FINRA) acknowledged the challenges of detecting spoofing and other manipulative practices in real time, citing the complexity of modern trading systems.
However, retail investors argue that the SEC’s reliance on outdated surveillance methods and its close ties to Wall Street firms have hindered meaningful reform.
Unlike South Korea’s swift adoption of technology-driven monitoring, the U.S. regulatory framework appears ill-equipped to keep pace with high-frequency trading and algorithmic manipulation.
Also Read: Trump Is Now Taking on Illegal Short Selling After Threat
Why the U.S. Lags Behind
The United States’ failure to protect retail investors stems from several structural and systemic issues:
- Regulatory Fragmentation: The U.S. financial system is overseen by multiple agencies, including the SEC, FINRA, and the Commodity Futures Trading Commission (CFTC), leading to overlapping jurisdictions and inconsistent enforcement. In contrast, SEBI in India and the FSC in South Korea operate as centralized regulators with clear mandates.
- Influence of Wall Street: Critics argue that the SEC’s revolving door with Wall Street firms creates conflicts of interest, undermining its ability to pursue aggressive enforcement actions against powerful market participants. Then there’s lobbying groups.
- Technological Lag: While South Korea and other nations have invested in AI and machine learning to detect market manipulation, the SEC has been slow to adopt similar technologies, relying instead on manual reviews and whistleblower tips, which aren’t very effective.
- Prioritization of Institutional Interests: Retail investors in the U.S. often feel that regulators prioritize the interests of hedge funds and institutional investors over those of individual traders. This perception was reinforced during the GameStop episode, when trading platforms like Robinhood restricted retail access to certain stocks, citing regulatory pressure.
Also Read: Trump Media Says Senator Warren Has Protected Hedge Funds and Naked Short Selling
Lessons from India and South Korea
The actions of SEBI and South Korea’s FSC offer valuable lessons for the United States.
First, regulators must prioritize real-time surveillance and leverage cutting-edge technology to detect manipulative practices like spoofing.
Second, centralized regulatory authority can streamline enforcement and ensure consistent application of rules.
Third, regulators should engage with retail investors, addressing their concerns transparently to rebuild trust in the financial system.
India’s SEBI has demonstrated that swift and decisive action can deter market manipulation and protect investors.
By impounding illicit gains and barring offenders from the market, SEBI sends a strong signal that manipulative practices will not be tolerated.
Similarly, South Korea’s use of temporary bans and hefty fines has stabilized its markets and empowered retail investors.
The Path Forward for the U.S.
To address the growing discontent among retail investors, the SEC must take concrete steps to strengthen its regulatory framework:
- Adopt Advanced Surveillance Tools: Invest in new technology such as AI and machine learning to detect spoofing, front-running, and other manipulative practices in real time, like India and South Korea have.
- Enhance Transparency: Publish detailed reports on investigations into high-profile cases like GameStop, AMC, DJT, MMTLP, and others to demonstrate accountability.
- Empower Retail Investors: Create channels for retail investors to report suspected manipulation and ensure their concerns are addressed promptly.
- Increase Penalties: Impose significant fines and market bans on offenders to deter future violations, mirroring the approach of SEBI and the FSC. This will rebuild trust and confidence.
- Streamline Oversight: Consolidate regulatory functions to eliminate inefficiencies and ensure consistent enforcement.
Related: A Congresswoman Now Introduces Bill To End FINRA
Why This Matters
The global fight against market manipulation is gaining momentum, with regulators in India and South Korea leading the charge.
SEBI’s crackdown on Patel Wealth Advisors for order spoofing underscores the importance of decisive action to maintain market integrity.
Meanwhile, South Korea’s technological advancements and strict enforcement have set a high standard for protecting retail investors.
In contrast, the United States continues to grapple with regulatory shortcomings, leaving retail investors in stocks like GameStop, AMC, and DJT feeling vulnerable to manipulation.
As retail investors in the U.S. continue to demand accountability, the SEC must learn from its global counterparts and prioritize the interests of individual traders.
By adopting advanced surveillance, enhancing transparency, and imposing meaningful penalties, the U.S. can restore confidence in its financial markets and ensure a level playing field for all investors.
Until then, the gap between global leaders like India and South Korea and the U.S. will only widen, to the detriment of retail investors and market integrity.
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Also Read: Investors now urge President Trump to investigate naked short selling in formal letter
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