sebi:EAD-6/PM-AB/72/2018-19

SEBI · SEBI · 2018-04-03 · Prasanta Mahapatra, Adjudicating Officer

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

Violation established; penalty of Rs.13,00,000 imposed under Section 15HA

Provisions invoked

• s. 15
• s. 15H
• s. 15I
• s. 15J

Regulations

• Reg. 3
• Reg. 2(1)(c)
• Reg. 4(1)
• Reg. 3(a)
• Reg. 4(2)(a)
• Reg. 2(1)(c)(2)
• Reg. 2(1)(c)(7)
• Reg. 2(1)(c)(8)

Holding

The Noticee violated Regulations 3(a), 4(1) and 4(2)(a) of the PFUTP Regulations by executing non-genuine reversal trades in illiquid BSE Stock Options, and a monetary penalty of Rs.13,00,000 under Section 15HA of the SEBI Act was imposed.

Full text

Adjudication Order in the matter of dealing in Illiquid Stock Options at the BSE Page2 of 18 allegations that the Noticee had violated Regulation 3(a), (b), (c), (d) and Regulation 4(1), 4(2) (a) of the SEBI (Prohibition of Fraudulent and Unfair Trading Practices related to Securities Markets) Regulations, 2003 (hereinafter be referred to as, the “PFUTP Regulations”).

Adjudication Order in the matter of dealing in Illiquid Stock Options at the BSE Page3 of 18 c) The trades entered by the Noticee were reversed on the same day with same counterparties at a substantial price difference without any basis for significant change in the contract price which indicates that these trades are artificial and are non-genuine in nature. d) A summary of dealings of the Noticee in the 122 Stock Options contracts in which the Noticee executed non-genuine reversal trades during the Investigation Period are as under: Table 1: Summary of trading of the Noticee in Illiquid Stock Options on BSE S. No. Contract Name Avg. Buy Rate (Rs.) Total Buy Volume (no. of units) Avg. Sell Rate (Rs.) Total Sell Volume (no. of units) % of Artificial trades of the Noticee in the contract to Total trades in the contract % of Artificial Volume generated by Noticee in the contract to Total Volume in the Contract 1 ADPW15JUL26.00PEW2 0.85 140000 0.05 140000 13% 6% 2 ADPW15JUL26.00PEW4 0.65 120000 0.05 120000 13% 11% 3 ADPW15JUL32.00CEW2 0.90 208000 0.05 208000 29% 16% 4 ALBK15JUL100.00CEW4 1.00 80000 0.10 80000 50% 35% 5 ALBK15JUL105.00CEW4 0.80 42000 0.05 42000 50% 30% 6 ALLD15JUL65.00PEW3 0.74 560000 0.05 560000 38% 62% 7 ALLD15JUL80.00PEW4 1.00 120000 0.05 120000 40% 34% 8 ALLD15JUN80.00CEW2 1.25 36000 0.10 36000 18% 14% 9 ALLD15MAY60.00PE 1.60 48000 0.10 48000 33% 5% 10 ANBK15JUL65.00PEW3 0.68 400000 0.05 400000 15% 21% 11 ANBK15JUN60.00CEW2 12.00 24000 8.75 24000 17% 5% 12 AN

Adjudication Order in the matter of dealing in Illiquid Stock Options at the BSE Page4 of 18 S. No. Contract Name Avg. Buy Rate (Rs.) Total Buy Volume (no. of units) Avg. Sell Rate (Rs.) Total Sell Volume (no. of units) % of Artificial trades of the Noticee in the contract to Total trades in the contract % of Artificial Volume generated by Noticee in the contract to Total Volume in the Contract 17 CIPL15JUL540.00PE 9.00 5000 4.50 5000 20% 4% 18 DABU15JUN240.00CEW2 22.00 10000 12.10 10000 22% 9% 19 DHFL15SEP440.00CEW1 22.00 12000 6.00 12000 33% 17% 20 DLFL15SEP115.00PEW1 3.50 4000 0.50 4000 50% 17% 21 FEDB15JUN145.00CEW1 2.00 20000 0.10 20000 5% 3% 22 GMRI15JUL14.00PEW3 0.50 650000 0.05 650000 13% 45% 23 GMRI15JUL16.00CE 0.70 390000 0.10 390000 18% 40% 24 GMRI15JUL18.00CEW4 0.50 520000 0.05 520000 50% 42% 25 GMRI15JUN18.00CEW2 1.00 36692 0.10 36692 22% 19% 26 HDIL15JUN90.00PEW2 1.25 30000 0.10 30000 25% 14% 27 HERO15SEP2490.00CE 46.00 6250 32.00 6250 0% 3% 28 HNZL15SEP125.00CEW1 9.00 24000 2.50 24000 50% 17% 29 HPCL15JUL660.00CEW4 207.00 7500 140.00 7500 40% 83% 30 HXTL15SEP245.00PEW1 12.00 11000 1.50 11000 50% 17% 31 IBRL15JUN60.00CEW2 0.90 60000 0.10 60000 25% 4% 32 IBRL15SEP50.00CEW2 12.00 16000 8.10 16000 25% 17% 33 IBRL15SEP70.00PEW2 8.50 12000 5.00 12000 40% 21% 34 IDBI15JUL50.00PEW3 0.85 140000 0.05 140000 22% 11% 35 IDBI15JUL55.00PE 0.90 120000 0.10 120000 7% 5% 36 IDBI15JUL70.00CEW1 0.90 112000 0.05 112000 8% 9% 37 IDBI15JUN50.00PEW2 1.05 40000 0.05 40000 10% 5% 38 ID

Source: SecMarx — sebi:EAD-6/PM-AB/72/2018-19. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.