sebi:Order/KS/AA/2019-20/3416
This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.
Facts / Headnote
Penalty imposed on the Noticee for violation of PFUTP Regulations
Provisions invoked
- s. 15
- s. 19
- s. 15H
- s. 15I
- s. 15J
- s. 15F
- s. 28A
- s. 15I(1)
Regulations
- Reg. 3
- Reg. 2(1)(c)
- Reg. 3(a)
Parties
- Royal Fincomm Private Limited
Holding
The Adjudicating Officer held that Royal Fincomm Private Limited violated Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a) of the PFUTP Regulations by executing 35 non-genuine reversal trades in 13 stock options contracts that created artificial volume, and imposed a penalty of Rs. 5,00,000 under Section 15HA of the SEBI Act.
Full text
Page 2 of 22 crore units or 54.68% of the total market volume in stock options segment of BSE during the Investigation Period. It was observed that Royal Fincomm Private Limited (hereinafter referred to as the “Noticee”) was one of the various entities which indulged in execution of reversal trades in stock options segment of BSE during the Investigation Period. 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 alleged to be manipulative, deceptive in nature. In view of the same, SEBI initiated adjudication proceedings against the Noticee for violation of the 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”).
Page 3 of 22 of the SEBI Act for the violations alleged to have been committed by the Noticee. 5. It was inter alia alleged in the SCN that the Noticee had 35 non genuine trades in 13 Stock Options contracts which resulted in artificial volume of total 22,57,500 units. The Noticee made a loss of approx. Rs. 1,21,10,000 by executing non genuine trades during the I.P. Summary of dealings of the Noticee in 13 Stock Options contracts, in which the Noticee allegedly executed non genuine trades during the I.P, is as follows: S. No. Contract Name Avg. Buy Rate (Rs.) Total Buy Volume (No. of units) Avg. Sell Rate Total Sell Volume (No. of units) % of Non Genuine trades of Noticee in the contract to Noticee's Total trades in the Contract % of Non Genuine trades of Noticee in the contract to Total trades in the Contract % of Artificial Volume generated by Noticee in the contract to Noticee's Total Volume in the Contract % of Artificial Volume generated by Noticee in the contract to Total Volume in the Contract 1 ACCL15APR1620.00PEW3 48.00 50000 24.00 50000 100% 100% 100% 100% 2 ASPL15APR780.00PE 12.30 91000 1.30 91000 100% 33% 100% 38% 3 ASPL15APR840.00CEW4 14.50 77000 1.50 77000 100% 43% 100% 66% 4 BOBL15APR155.00CE 10.00 100000 5.00 100000 100% 40% 100% 40% 5 BOIL15APR200.00PE 7.00 150000 3.00 150000 100% 60% 100% 54% 6 CESC15APR580.00PEW4 13.00 60000 3.00 60000 100% 25% 100% 33% 7 HNDL15APR130.00CEW4 7.00 120000 3.00 120000 100% 100% 100% 100% 8 HNDL15APR130.00PE 6.00 120000 2.00 12
Page 4 of 22 (a) The Noticee has executed non genuine trades in 13 contracts, wherein all trades of the Noticee in the said 13 contracts were non genuine trades. (b) No. of non genuine trades of the Noticee has significantly contributed to the total no. of trades from the market in the above contracts, as 0.32% to 100% of the trades that happened in the aforementioned contracts were due to non-genuine trades executed by the Noticee. (c) A substantial 100% of volume generated by the Noticee in each of the above contracts was artificial volume, and further artificial volume generated by the Noticee also contributed to 14% to 100% of the total volume from the market in said contracts. (d) Non genuine trades executed by the Noticee in above contracts had significant differential in buy rates and sell rates considering that the trades were reversed on same day.
You have read the preview. Create a free account to read the full order, track this party, and analyse it in Ontology.
Free accounts include 10 searches/day with full order access.
Source: SecMarx — sebi:Order/KS/AA/2019-20/3416. 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.