sebi:Order/KS/AA/2019-20/6513

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.

Provisions invoked

• s. 15
• s. 19
• s. 15H
• s. 15I
• s. 15J
• s. 15F
• s. 28A
• s. 15I(1)

Regulations

• Reg. 3
• Reg. 200
• Reg. 3(a)

Parties

• Scan Steels Limited

Holding

The Adjudicating Officer rejected Scan Steels Limited’s claim that it could not be held responsible because it was unaware of the impugned transactions. The supplied excerpt does not show the final determination on violation or penalty.

Full text

Page 2 of 33 April 1, 2014 to September 30, 2015 (hereinafter referred to as "Investigation Period / IP") 2. Pursuant to investigation, it was observed that total 2,91,643 trades comprising substantial 81.38% of all the trades executed in stock options segment of BSE during the Investigation Period 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 Investigation Period. It was observed that Scan Steels 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 33 (hereinafter referred to as “SEBI Act”) and Rule 3 of SEBI (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 (hereinafter referred to as “Adjudication Rules”) to conduct adjudication proceedings in the manner specified under Rule 4 of Adjudication Rules read with section 15I (1) and (2) of SEBI Act, and if satisfied that penalty is liable, impose such penalty deemed fit in terms of Rule 5 of Adjudication Rules and Section 15HA of SEBI Act.

Page 4 of 33 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 ADPW14JUL58.00PE 0.95 400000 2.45 400000 100% 100% 100% 100% 2 ADPW15APR38.00CEW4 5.00 248000 6.80 248000 100% 100% 100% 100% 3 ADPW15APR55.00PE 7.00 160000 10.10 160000 100% 17% 100% 26% 4 ALBK14AUG120.00PE 0.70 100000 3.20 100000 100% 100% 100% 100% 5 ANBK14AUG80.00PE 3.00 316000 6.50 316000 100% 100% 100% 100% 6 ANBK14NOV70.00PEW1 1.00 392000 2.70 392000 100% 100% 100% 100% 7 ANBK15APR70.00CE 5.90 248000 7.90 248000 100% 100% 100% 100% 8 ANBK15JUL60.00CEW1 9.70 68000 17.00 68000 100% 50% 100% 53% 9 ANBK15JUN60.00CE 10.02 484000 11.06 484000 100% 25% 100% 55% 10 ANBK15JUN60.00CEW3 5.60 104000 10.30 104000 100% 25% 100% 25% 11 ANBK15SEP75.00PEW3 9.00 100000 13.11 100000 100% 19% 100% 23% 12 ARVI15JUL260.00PEW4 1.00 78000 8.00 78000 100% 100% 100% 100% 13 DISH15JUN90.00CE 12.70 436000 12.83 436000 100% 43% 100% 91% 14 EXID14SEP165.00CEW2 0.21 334000 3.25 334000 100% 100% 100% 100% 15 EXID15JUL140.00CE 10.20 90000 19.00 90000 100% 33% 100% 31% 16 FEDB14OCT140.00CE 0.25 68000 4.00

Source: SecMarx — sebi:Order/KS/AA/2019-20/6513. 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.