sebi:ORDER/SRP/HKS/2018-19/2434
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Facts / Headnote
Penalty imposed on Noticee
Provisions invoked
- s. 15
- s. 15H
- s. 15J
- s. 15F
Regulations
- Reg. 4
- Reg. 3
- Reg. 2
- Reg. 3(a)
Parties
- ISD Industries Private Limited
Holding
The Noticee, ISD Industries Private Limited, violated Regulations 3(a), (b), (c), (d) and 4(1), 4(2)(a) of the PFUTP Regulations by executing reversal trades in illiquid stock options with the same counterparties on the same day, thereby creating artificial volume and a false or misleading appearance of trading, and is liable for a penalty of Rs. 5,00,000 under Section 15HA of the SEBI Act.
Full text
Adjudication Order in respect of ISD Industries Private Limited Page 2 of 25 APPOINTMENT OF ADJUDICATING OFFICER 2. Initially, Shri Biju. S was appointed as the Adjudicating Officer by SEBI, in the matter. Subsequently, on July 06, 2018 the undersigned has been appointed as the Adjudicating Officer, to inquire into and adjudge under Section 15HA of the Securities and Exchange Board of India Act, 1992, (hereinafter referred to as “SEBI Act”) the aforesaid violations alleged to have been committed by the Noticee.
Adjudication Order in respect of ISD Industries Private Limited Page 3 of 25 the period between 01.04.14 to 30.09.15 are a matter of record. Admittedly, Noticee has not been provided the copy of the ‘Investigation Report’ based on which the present SCN has been issued, which is in gross violation of principles of natural justice. Noticee reserves its right to seek copy of investigation Report and to file additional reply in the matter pursuant to availability of Investigation Report. Further the SCN was issued after a lapse of almost 3 years from the date of transactions carried out i.e., April 1, 2014 to September 30, 2015, which is beyond comprehension or remembrance under normal circumstances for trades in derivatives segment.
Adjudication Order in respect of ISD Industries Private Limited Page 4 of 25 there is no physical delivery of shares. Therefore, the alleged trading in the stock options cannot be alleged to have created any false or misleading appearance of trading in stock options.
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Source: SecMarx — sebi:ORDER/SRP/HKS/2018-19/2434. 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.