sebi:ORDER/SBM/KL/2021-22/15501

SEBI · SEBI · 2021-04-26 · SURESH B MENON, ADJUDICATING OFFICER

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Facts / Headnote

Penalty of Rs.5,00,000 imposed on Noticee for violation of Regulations 3(a), 4(1) and 4(2)(a) of PFUTP Regulations

Provisions invoked

• s. 15
• s. 19
• s. 15H
• s. 15J
• s. 28A

Regulations

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

Parties

• Abhijit Roy Barman HUF

Holding

The Noticee violated Regulations 3(a), 4(1) and 4(2)(a) of the PFUTP Regulations by executing 6 non-genuine reversal trades in 3 illiquid stock option contracts at BSE creating artificial volume, and is liable to monetary penalty under Section 15HA of the SEBI Act.

Full text

___________________________________________________________________________ Adjudication order in respect of Abhijit Roy Barman HUF in the matter of dealing in Illiquid Stock Options at BSE Page 2 of 15 which had indulged in the execution of the non-genuine trades in the Stock Options Segment at BSE during the above referred investigation period. It was observed that Noticee had entered into reversal trades with its counterparties which involved squaring off transactions with significant difference in sell value and buy value of the transactions. It was therefore alleged that Noticee had executed the reversal trades, which were non-genuine in nature and have created false or misleading appearance of trading in terms of creation of artificial volume in the Stock Options segment at BSE and therefore, it is alleged that the Noticee has violated the provisions of regulations 3(a), (b), (c), (d) and regulation 4(1), 4(2) (a) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Markets) Regulations, 2003 (hereinafter referred to as ‘PFUTP Regulations’). In view of the above reasons, adjudication proceedings have been initiated against the Noticee under the provisions of section 15 HA of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as ‘SEBI Act’). APPOINTMENT OF ADJUDICATING OFFICER

___________________________________________________________________________ Adjudication order in respect of Abhijit Roy Barman HUF in the matter of dealing in Illiquid Stock Options at BSE Page 3 of 15 non-genuine trades in Stock Options Segment of BSE during the Investigation period. Following points deals with the dealings of Noticee during the Investigation period and allegations against it for execution of non-genuine trades. b. For the purpose of illustration of non-genuine trades and creation of artificial volume by the Noticee, details of trading done by the Noticee in the contracts viz. “AXIS15APR560.00CEW4” on March 31, 2015, is given below: Date Buyer Seller Buy Order Time Sell Order Time Trade Time Trade Rate (Rs.) Trade Quantity 31/03/2015 ABHIJIT ROY BARMAN HUF ASSAM VELLY FINANCE PVT LTD 10:38:15.200065 10:38:15.153161 10:38:15.200065 6 43000 31/03/2015 ASSAM VELLY FINANCE PVT LTD ABHIJIT ROY BARMAN HUF 10:38:22.153535 10:38:22.202471 10:38:22.202471 20 43000 c. It is observed from the table above that the trades entered by the Noticee in the contract of “AXIS15APR560.00CEW4” on March 31, 2015, with its counterparty viz. Assam Velly Finance Pvt Ltd were reversed between the Noticee and the same counterparty on the same day resulting in reversal of trades which are, prima facie, considered to be non-genuine. Therefore, in the process artificial volume in the stock option contract at BSE has been generated by the Noticee through such non-genuine trades. From the

___________________________________________________________________________ Adjudication order in respect of Abhijit Roy Barman HUF in the matter of dealing in Illiquid Stock Options at BSE Page 4 of 15 f. In view of the foregoing, it is alleged that the Noticee, by indulging in execution of reversal trades in Stock Options with same entities on the same day, which were non-genuine in nature, has created false or misleading appearance of trading in the aforementioned contracts traded in the option segment of BSE. In view of the fact that these options contracts were illiquid in nature, having very small volume in trading, the Noticee allegedly created artificial volumes in stock options which was manipulative and deceptive in nature. Therefore, in view of above, it is alleged that the Noticee has violated Regulation 3(a), (b), (c), (d), 4(1) and 4(2)(a) of PFUTP Regulations, 2003

Source: SecMarx — sebi:ORDER/SBM/KL/2021-22/15501. 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.