sebi:EAD-7/BJD/BKM/2018-19/2298

SEBI · SEBI · B J Dilip, Adjudicating Officer

Reviewed by Varun Matlani, Advocate — Securities Lawyer practicing in SAT and SEBI

Facts / Headnote

Penalty of Rs 5,00,000 imposed under Section 15HA of SEBI Act for violation of PFUTP Regulations

Provisions invoked

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

Regulations relied on

• SEBI (PFUTP) Regulations, 2003 — 3(a)
• SEBI (PFUTP) Regulations, 2003 — 3(b)
• SEBI (PFUTP) Regulations, 2003 — 3(c)
• SEBI (PFUTP) Regulations, 2003 — 3(d)
• SEBI (PFUTP) Regulations, 2003 — 4(1)
• SEBI (PFUTP) Regulations, 2003 — 4(2)(a)

Parties

• Purba Agro Food Pvt. Ltd.

Holding

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

Full text

Adjudication Order in respect of Purba Agro Food Pvt. Ltd. Page 2 of 22 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 Purba Agro Food Pvt. Ltd. (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 Purba Agro Food Pvt. Ltd. Page 3 of 22 S. No Contract Name Avg. Buy Rate (Rs.) Total Buy Volume (no. of units) Avg. Sell Rate (Rs.) Total Sell Volume (no. of units) Numb er of non genuin e trades execut ed by Entity in the Contra ct Total numb er of trades execu ted by the Entit y in the Contr act Total numb er of trades execu ted in the contr act % of Non Genuine trades of Noticee in the contract to Noticee’s Total trades in the Contract % of Non Genuine trades of Entity in the contract to Total trades in the Contract % of Artificial Volume generated by Noticee in the contract to Noticee’s Total Volume in the Contract % of Artificial Volume generated by Noticee in the contract to Total Volume in the Contract 8 HNDL15APR120.00CEW2 12.40 96000 6.05 96000 3 3 5 100% 60% 100% 79% 9 IBRL15MAR65.00PEW1 2.85 56000 0.05 56000 2 2 4 100% 50% 100% 52% 10 IDBI15MAR50.00CE 22.90 196000 13.75 196000 2 2 6 100% 33% 100% 65% 11 JPPW15JAN10.00PEW3 1.10 2490000 0.10 2490000 3 3 3 100% 100% 100% 100% 12 NHPC14DEC14.00PE 1.10 300000 0.10 300000 3 3 13 100% 23% 100% 19% 13 NHPC15JAN12.00PEW3 1.05 120000 0.10 120000 3 3 10 100% 30% 100% 19% 14 NHPC15JAN16.00PEW3 1.05 1510000 0.05 1510000 5 5 21 100% 24% 100% 31% 15 NHPC15JAN18.00PEW3 1.05 100000 0.10 100000 2 2 11 100% 18% 100% 5% 16 NHPC15MAR30.00CEW2 1.50 540000 0.05 540000 8 8 8 100% 100% 100% 100% 17 SAIL15JAN60.00PEW3 2.40 4000 0.05 4000 2 2 3 100% 67% 100% 2% 18 SAIL15JAN65.00PEW3 2.40 104000 0.05 104000 3

Adjudication Order in respect of Purba Agro Food Pvt. Ltd. Page 4 of 22 substantial 6% to 100% of the trades that happened in the aforementioned contracts were due to non-genuine trades executed by the Noticee. c) A substantial 2% to 100% 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.

Source: SecMarx — sebi:EAD-7/BJD/BKM/2018-19/2298. 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.