sebi:MC/VS/2019-20/3713

SEBI · SEBI · 2018-05-31 · Maninder Cheema, 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

Penalty imposed on Noticee for violation of PFUTP Regulations, 2003

Provisions invoked

• s. 15
• s. 15H
• s. 15I
• s. 15J

Regulations

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

Parties

• Kusum Traders

Holding

The Noticee, Kusum Traders, was found to have violated Regulation 3(a), 4(1) and 4(2)(a) of the PFUTP Regulations, 2003 by executing non-genuine reversal trades in illiquid stock options on the BSE, and a penalty of Rs. 5,00,000 was imposed under Section 15HA of the SEBI Act.

Full text

Adjudication Order in respect of Kusum Traders in the matter of Dealing in Illiquid options on the BSE Page 2 of 14 counterparties, leading to allegations that the Noticee had violated Regulation 3(a),(b),(c),(d) and Regulation 4(1), 4(2)(a) of SEBI (Prohibition of Fraudulent and Unfair Trading Practices related to Securities Markets) Regulations, 2003 (hereinafter, referred to as “PFUTP Regulations, 2003”).

Adjudication Order in respect of Kusum Traders in the matter of Dealing in Illiquid options on the BSE Page 3 of 14 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 Noticee in 36 Stock Options contracts in which Noticee allegedly executed non-genuine reversal trades during the Investigation Period, as provided in the SCN is reproduced below -

Adjudication Order in respect of Kusum Traders in the matter of Dealing in Illiquid options on the BSE Page 4 of 14 S.No. Contract Name AAvg. Buy Rate (Rs.) Total Buy Volume (no. of units) AAvg. Sell Rate (Rs.) Total Sell Volume (no. of units) % 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 25 NHPC15JUN16.00CE 3.50 100000 2.00 100000 100% 11% 26 NHPC15JUN24.00PE 4.50 170000 3.00 170000 100% 16% 27 PFCL15APR270.00CE 3.00 150000 13.00 150000 100% 37% 28 PFCL15APR280.00PE 14.00 150000 4.00 150000 100% 79% 29 PTCI15JUN75.00PEW3 15.00 128000 8.80 128000 100% 67% 30 RANB15APR800.00CE 20.00 50000 40.00 50000 100% 24% 31 RCAP15APR420.00CE 21.00 91000 9.00 91000 100% 38% 32 RCAP15APR440.00PE 15.81 74000 16.89 74000 100% 34% 33 TCSL15APR2450.00PE 28.00 11500 2.00 11500 100% 5% 34 TCSL15APR2550.00PE 16.29 42500 61.00 42500 100% 16% 35 TCSL15APR2700.00CE 3.50 40000 23.50 40000 100% 50% 36 UNIT15JUN2.00CEW3 5.75 99000 3.75 99000 100% 8%

Source: SecMarx — sebi:MC/VS/2019-20/3713. 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.