sebi:Order/KS/AA/2019-20/5782

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

• Ms. Ruchika Goel

Holding

The Adjudicating Officer held that the Noticee, Ms. Ruchika Goel, violated regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a) of the PFUTP Regulations by executing 88 non-genuine reversal trades in 13 stock options contracts on BSE, and imposed a penalty of Rs. 5,00,000 under Section 15HA of the SEBI Act.

Full text

Page 2 of 14 crore units or 54.68% of the total market volume in stock options segment of BSE during the Investigation Period. It was observed that Ms. Ruchika Goel (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 14 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 executed 88 non genuine trades in 13 Stock Options contracts which resulted in artificial volume of total 55,86,000 units. The Noticee made a profit of approx. Rs. 1,07,45,450 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. in the stock option segment of BSE, 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 IFCI15APR24.00CEW2 8.58 272000 11.82 272000 100% 42% 100% 24% 2 IFCI15APR24.00CEW3 8.55 528000 12.31 528000 100% 73% 100% 68% 3 IFCI15APR24.00CEW4 6.64 376000 12.16 376000 100% 19% 100% 23% 4 IFCI15APR26.00CEW2 4.70 16000 7.70 16000 100% 8% 100% 2% 5 IFCI15APR26.00CEW4 4.75 16000 7.70 16000 100% 20% 100% 6% 6 NHPC15APR12.00CEW2 6.03 230000 10.28 230000 100% 18% 100% 11% 7 NHPC15APR12.00CEW3 6.52 230000 10.58 230000 100% 11% 100% 8%

Page 4 of 14 6. From the above table, following was noted as regards to dealings of the Noticee: (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 8% 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 2% 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.

Source: SecMarx — sebi:Order/KS/AA/2019-20/5782. 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.