sebi:EAD-7/BJD/BKM/2018-19/1740

SEBI · SEBI · B J Dilip, 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 found; penalty of Rs 5,00,000 imposed under Section 15HA of SEBI Act

Provisions invoked

• s. 15
• s. 19
• s. 15H
• s. 15I
• s. 15J
• s. 15I(1)

Regulations

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

Parties

• Pravinchandra Gagaldas Sanghvi

Holding

The Noticee violated Regulations 3(a), 3(b), 3(c), 3(d), 4(1) and 4(2)(a) of PFUTP Regulations by executing non-genuine reversal trades in illiquid BSE stock options creating artificial volume, and is liable to a monetary penalty of Rs 5,00,000 under Section 15HA of SEBI Act.

Full text

Adjudication Order in respect of Pravinchandra Gagaldas Sanghvi Page 2 of 23 3. It was observed that the said non- genuine trades were not restricted to any specific contract or between any specific set of entities. It was observed that Pravinchandra Gagaldas Sanhvi (hereinafter referred to as “Noticee”) was one of the various entities which were indulged in execution of non-genuine trades in Stock Options Segment of BSE during the investigation period. The following points narrate the dealings of the Noticee during the investigation period and the allegations against him for execution of non-genuine trades.

Adjudication Order in respect of Pravinchandra Gagaldas Sanghvi Page 3 of 23 6. From the above table, the following is observed as regards to dealings of the Noticee: a) The Noticee had executed non genuine trades in 7 contracts. b) The number of non-genuine trades of the Noticee had significantly contributed to the total number of trades from the market in the above contracts, as a substantial 5% to 33% of the trades that happened in the aforementioned contracts were due to non-genuine trades executed by the Noticee. c) A substantial 7% to 44% of volumes generated by the Noticee in each of the above contracts were artificial volume, and further artificial volume generated by it also contributed to significant contribution of the total volume from the market in said contracts. d) Non genuine trades executed by the Noticee in above contracts had significant differential in buy rates and sell rates considering that the trades were reversed on same day.

Adjudication Order in respect of Pravinchandra Gagaldas Sanghvi Page 4 of 23 section 19 read with section 15I(1) of the SEBI Act, 1992 and Rule 3 of SEBI(Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 (hereinafter, referred to as “SEBI Adjudication Rules”) to conduct adjudication proceedings in the manner specified under rule 4 of SEBI Adjudication Rules, 1995 read with section 15I (1) and (2) of SEBI Act, and if satisfied that

Source: SecMarx — sebi:EAD-7/BJD/BKM/2018-19/1740. 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.