sebi:Order/BM/LD/2022-23/16002

SEBI · SEBI · 2021-09-23 · Barnali Mukherjee, Adjudicating Officer

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

Facts / Headnote

Violation established; penalty imposed

Provisions invoked

• s. 15
• s. 19
• s. 11B
• s. 11
• s. 15H
• s. 15J
• s. 15F
• s. 28A

Regulations relied on

• SEBI (PFUTP) Regulations, 2003 — 3(a)
• SEBI (PFUTP) Regulations, 2003 — 4(1)

Parties

• Ashok Kumar Rajgaria HUF

Holding

The Noticee violated Regulations 3(a), (b), (c), (d) and 4(1) & 4(2)(a) of the PFUTP Regulations, 2003 by executing non-genuine reversal trades in illiquid BSE stock options that created false appearance of trading and artificial volume. A monetary penalty of Rs.1,50,000 was imposed on Ashok Kumar Rajgaria HUF under Section 15HA of the SEBI Act, 1992.

Full text

Adjudication Order in respect of Ashok Kumar Rajgaria HUF in the matter of 2 | P a g e dealings in illiquid stock options at the BSE. provisions of Regulation 3(a),(b),(c),(d) and Regulation 4(1) & 4(2)(a) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003 (hereinafter referred to as “PFUTP Regulations, 2003”).

Adjudication Order in respect of Ashok Kumar Rajgaria HUF in the matter of 3 | P a g e dealings in illiquid stock options at the BSE. (iv) 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 contract viz. “GMRI14SEP30.00CEW1” on 01/09/2014 is given below : l. no Contract name Avg. buy rate (Rs.) Total buy volume (no. of units) Avg. sell rate (Rs.) Total sell volume (no. of units) Total Volume in the Contract

Adjudication Order in respect of Ashok Kumar Rajgaria HUF in the matter of 4 | P a g e dealings in illiquid stock options at the BSE.  The transaction was carried out through a recognised stock exchange and an authorised broker. He was totally unaware who on the other side of the transaction was buying or selling the equities / stock. It was only the broker / exchange, who were aware, who were present on the part of the transaction and not the trade trading in such equities /stock.  He had purchased the equity stock with intent of making certain legitimate and lawful gains / profit. He had purchased the stock at certain value and when the value of the equity /stock increased post a certain timeframe, he decided to make profit out of the transaction by selling the stock / equities. The price of equity is regulated by the exchange and depends on the demand-supply market dynamics. And under no circumstances/scenario, the same is regulated by the trader or is under his/her influence.  It is a mere coincidence that the buyer and seller on the other part of the transaction happens to be the same entity in the concluded transaction.  He had engaged in only a single buy & sell trade and in no way was aware of the implications of such a small value transaction , done out of ignorance.

Source: SecMarx — sebi:Order/BM/LD/2022-23/16002. 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.