sebi:Order/KS/AA/2019-20/5783

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

• S C Jain and Son HUF

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 77 non-genuine reversal trades in 32 stock options contracts on BSE, and imposed a penalty of Rs. 5,40,000 under Section 15HA of the SEBI Act.

Full text

Page 2 of 15 crore units or 54.68% of the total market volume in stock options segment of BSE during the Investigation Period. It was observed that S C Jain and Son HUF (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 15 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 77 non genuine trades in 32 Stock Options contracts which resulted in artificial volume of total 86,24,500 units. The Noticee made a profit of approx. Rs. 1,87,09,425 by executing non genuine trades during the I.P. Summary of dealings of the Noticee in 32 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 AHEL15MAR1470.00CE 1.00 52250 21.92 52250 100% 21% 100% 28% 2 ALBK15APR105.00PEW4 2.25 68000 4.45 68000 100% 50% 100% 30% 3 ALBK15APR130.00PEW3 16.28 110000 29.91 110000 100% 67% 100% 85% 4 ALLD15MAR50.00PEW3 0.05 400000 1.60 400000 100% 14% 100% 25% 5 ALLD15MAR55.00PEW3 0.05 184000 2.45 184000 100% 11% 100% 9% 6 ALLD15MAR65.00PEW3 0.05 72000 0.84 72000 100% 10% 100% 6% 7 ALLD15MAR90.00CEW3 0.05 208000 1.21 208000 100% 40% 100% 12%

Page 4 of 15 16 IOBL15APR34.00CE 5.90 72000 9.40 72000 100% 100% 100% 100% 17 IRBI15MAR240.00PE 5.00 17000 11.00 17000 100% 33% 100% 20% 18 JPPW15APR18.00PEW3 4.25 435000 7.65 435000 100% 17% 100% 54% 19 JPPW15MAR14.00CE 0.05 240000 0.90 240000 100% 13% 100% 10% 20 JPPW15MAR18.00CEW3 0.05 75000 0.35 75000 100% 15% 100% 5% 21 JPPW15MAR8.00PEW3 0.05 30000 0.45 30000 100% 18% 100% 1% 22 JSWE15APR95.00CEW3 14.35 60000 24.35 60000 100% 100% 100% 100% 23 NHPC15MAR12.00PE 0.05 120000 0.85 120000 100% 100% 100% 100% 24 NMDC15APR150.00PEW2 14.10 104000 24.40 104000 100% 15% 100% 52% 25 SAIL14SEP80.00PEW3 0.50 104000 2.54 104000 100% 60% 100% 21% 26 SAIL15APR50.00CEW3 15.20 140000 25.90 140000 100% 33% 100% 76% 27 SAIL15MAR45.00PEW3 0.05 264000 2.85 264000 100% 67% 100% 73% 28 SAIL15MAR50.00PE 0.05 404000 1.34 404000 100% 27% 100% 26% 29 SYND15APR130.00PEW3 16.40 32000 28.90 32000 100% 20% 100% 36% 30 UCOB15APR45.00CEW3 13.80 40000 26.20 40000 100% 50% 100% 67% 31 UCOB15APR90.00PEW3 15.15 92000 26.00 92000 100% 100% 100% 100% 32 VOLT14SEP250.00CE 8.40 80000 18.40 80000 100% 100% 100% 100%

Source: SecMarx — sebi:Order/KS/AA/2019-20/5783. 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.