sebi:Order/GR/PU/2021-22/14460
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Facts / Headnote
Violation established; monetary penalty of Rs 5,00,000 imposed under Section 15HA of the SEBI Act, 1992
Provisions invoked
- s. 15
- s. 19
- s. 15H
- s. 15J
- s. 11C
- s. 15F
- s. 28A
Regulations
- Reg. 4
- Reg. 3
- Reg. 3(a)
Parties
- Godghate Sugandha Sitarampant
Holding
The Noticee violated Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a) of the PFUTP Regulations, 2003 by executing 4 non-genuine reversal trades in 2 illiquid BSE stock option contracts creating artificial volume. The Noticee is liable to a monetary penalty of Rs 5,00,000 under Section 15HA of the SEBI Act, 1992.
Full text
Page 2 of 25 2. Pursuant to investigation, it was observed that total 2,91,643 trades comprising substantial 81.38% of all the trades executed in stock options segment of BSE during the IP were non genuine trades. The aforesaid non- genuine trades resulted into creation of artificial volume to the tune of 826.21crore units or 54.68% of the total market volume in stock options segment of BSE during the IP. It was observed that Godghate Sugandha Sitarampant (PAN-BDOPG1954R) (hereinafter referred to as the “Noticee”) was one of the various entities who indulged in execution of reversal trades in stock options segment of BSE during the IP. Such trades were observed to be non-genuine in nature and created false or misleading appearance of trading in terms of artificial volumes in stock options and therefore were alleged to be manipulative as well as deceptive in nature. In view of the same, SEBI initiated adjudication proceedings against the Noticee for the violation of provisions of Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003 (hereinafter referred to as “PFUTP Regulations, 2003”).
Page 3 of 25 1995 (hereinafter, referred to as “Adjudication Rules”) to conduct adjudication proceedings in the manner specified under Rule 4 of Adjudication Rules read with Section15-I (1) and (2) of the SEBI Act, and if satisfied that penalty is liable, may impose such penalty as deemed fit in terms of Rule 5 of Adjudication Rules and Section 15HA of the SEBI Act. SHOW CAUSE NOTICE, REPLY AND HEARING
Page 4 of 25 6. From the above table, following was noted as regards the dealings of the Noticee: (a) The Noticee had executed non genuine trades in 2 contracts, wherein all trades of Noticee in the said 2 contracts were non genuine trades. (b) The number of non-genuine trades of the Noticee had significantly contributed to total number of trades from the market in the above contracts, as 5.71% to 7.41% of the trades that happened in the two contracts were due to non-genuine trades executed by the Noticee. (c) The entire 100% of volume generated by Noticee in all of the above contracts was artificial volume, and further, the percentage of artificial volume generated by the Noticee in the above contracts to the total volume from the market in said contracts was in the range of 10.1% to 10.94%. Therefore, substantial volume has been generated by the Noticee in each of the above contracts were artificial volume. (d) Non genuine trades executed by the Noticee in above contracts had significant difference in buy rates and sell rates considering that the trades were reversed on same day.
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Source: SecMarx — sebi:Order/GR/PU/2021-22/14460. 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.