sebi:Order/KS/AA/2019-20/3417

SEBI · SEBI · 2018-04-03 · K Saravan, Chief General Manager & Adjudicating Officer

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. 3(a)

Parties

• Shri Raju Mukund Vanarase

Holding

The Adjudicating Officer held that the Noticee violated regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a) of the PFUTP Regulations by executing 285 non-genuine reversal trades in 79 stock option contracts on BSE, and imposed a penalty of Rs. 15,60,000 under Section 15HA of the SEBI Act.

Full text

Page 2 of 18 crore units or 54.68% of the total market volume in stock options segment of BSE during the Investigation Period. It was observed that Shri Raju Mukund Vanarase (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 18 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 285 non genuine trades in 79 Stock Options contracts which resulted in artificial volume of total 17,79,000 units. The Noticee made a loss of approx. Rs. 2,73,42,350 by executing non genuine trades during the I.P. Summary of dealings of the Noticee in 79 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 ADEL15AUG80.00CE 30.17 6000 12.85 6000 50% 50% 83% 83% 2 ALLD15JUL45.00CE 26.90 12000 13.15 12000 100% 100% 100% 100% 3 AMBC15AUG195.00CE 53.75 8000 23.25 8000 100% 100% 100% 100% 4 AMBC15JUN215.00CE 27.95 1000 11.95 1000 100% 100% 100% 100% 5 AMBC15OCT195.00CE 26.90 5000 11.05 5000 100% 100% 100% 100% 6 AMBC15SEP205.00CE 38.44 18000 17.03 18000 100% 100% 100% 100% 7 AMBC15SEP225.00CE 9.83 19000 3.73 19000 50% 50% 53% 53% 8 AMTK15AUG90.00CE 73.33 48000 36.47 48000 100% 100% 10

Page 4 of 18 20 BHEL15JUL205.00CE 57.50 6000 24.80 6000 100% 100% 100% 100% 21 BIOC15AUG390.00CE 104.70 6000 44.20 6000 100% 100% 100% 100% 22 BIOC15JUL380.00CE 108.20 2500 46.98 2500 100% 100% 100% 100% 23 BIOC15JUL390.00CE 87.00 1000 50.10 1000 100% 100% 100% 100% 24 BIOC15OCT430.00CE 48.70 3500 19.19 3500 100% 100% 100% 100% 25 BIOC15OCT440.00CE 40.60 3500 9.60 3500 100% 100% 100% 100% 26 BOBL15AUG120.00CE 28.60 6000 14.00 6000 100% 100% 100% 100% 27 BOBL15JUL120.00CE 32.15 10000 14.15 10000 100% 100% 100% 100% 28 BOIL15SEP130.00CE 56.63 23000 27.72 23000 100% 100% 100% 100% 29 CANB15AUG240.00CE 85.00 3000 50.00 3000 100% 100% 100% 100% 30 CARN15SEP145.00CE 23.30 9000 14.30 9000 100% 100% 100% 100% 31 CAST15AUG350.00CE 145.00 2000 64.50 2000 100% 100% 100% 100% 32 CRGL15AUG140.00CE 36.44 26000 15.80 26000 100% 100% 100% 100% 33 CRGL15JUL140.00CE 31.85 4000 13.78 4000 50% 50% 50% 50% 34 CRGL15JUN140.00CEW2 36.65 8000 15.65 8000 100% 100% 100% 100% 35 CRGL15JUN150.00CEW3 34.73 10000 14.68 10000 100% 100% 100% 100% 36 CRGL15OCT150.00CE 34.13 12000 13.85 12000 100% 100% 100% 100% 37 CRGL15OCT175.00CE 22.80 20000 3.73 20000 50% 50% 40% 40% 38 CRGL15SEP140.00CE 58.38 28000 29.37 28000 100% 100% 100% 100% 39 CRGL15SEP145.00CE 66.00 8000 28.55 8000 100% 100% 100% 100% 40 DABU15AUG210.00CE 82.86 35000 37.84 35000 100% 100% 100% 100% 41 DABU15OCT260.00CE 37.00 7000 14.60 7000 100% 50% 100% 78% 42 ENGI15AUG145.00CE 96.52 26000 50.39 26000 100% 100% 100% 100% 43 ENGI15AUG170.00CE 81.0

Source: SecMarx — sebi:Order/KS/AA/2019-20/3417. 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.