sebi:Order/GR/PU/2021-22/14887
Facts / Headnote
Penalty imposed on the Noticee for violation of PFUTP Regulations, 2003
Provisions invoked
- s. 15
- s. 19
- s. 15H
- s. 15J
- s. 15F
- s. 28A
- s. 149
Regulations relied on
- SEBI (PFUTP) Regulations, 2003
- SEBI (PFUTP) Regulations, 2003 — 3(a)
Parties
- Gitesh Tikamani HUF (PAN-AAFHG0088M)
Holding
The Noticee was found to have violated Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a) of the PFUTP Regulations, 2003 by executing non-genuine reversal trades in illiquid stock options contracts on BSE, and a penalty of Rs. 5,00,000 was imposed under Section 15HA of the SEBI Act.
Full text
Page 2 of 21 2. Pursuant to the investigation, it was observed that a total of 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 826.21 crore units or 54.68% of the total market volume in stock options segment of BSE during the IP. It was observed that Gitesh Tikamani HUF (PAN-AAFHG0088M) (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 21 4. Accordingly, a Settlement Scheme was framed under the SEBI (Settlement Proceedings) Regulations, 2018, which provided one-time opportunity for settlement of proceedings in the Illiquid Stock Options matter. The said scheme was kept open from August 01, 2020 till December 31, 2020. Adjudication proceedings were initiated against those entities who had not availed of the opportunity of settlement.
Page 4 of 21 why penalty should not be imposed under Section 15HA of the SEBI Act for the alleged violations specified in the SCN.
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