sebi:Order/MC/RM/2021-22/13490

SEBI · SEBI · 2021-06-21 · Maninder Cheema, Adjudicating Officer

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Facts / Headnote

Violation of Regulations 3(a), 4(1) and 4(2)(a) of PFUTP Regulations held established; penalty of Rs.5,00,000 imposed under Section 15HA of SEBI Act

Provisions invoked

• s. 15
• s. 15H
• s. 15I
• s. 15J

Regulations

• Reg. 3
• Reg. 4(1)
• Reg. 3(a)
• Reg. 4(2)(a)

Parties

• Lalit Kumar Saraf HUF

Holding

The Noticee violated Regulation 3(a), 4(1) and 4(2)(a) of the PFUTP Regulations, 2003 by executing non-genuine reversal trades in illiquid stock options at BSE and is liable to monetary penalty of Rs.5,00,000 under Section 15HA of the SEBI Act.

Full text

Adjudication Order in respect of Lalit Kumar Saraf HUF in the matter of Illiquid Stock Options at BSE. Page 2 of 13 and buy value of the transactions. The aforesaid reversal trades allegedly led to generation of artificial volumes.

Adjudication Order in respect of Lalit Kumar Saraf HUF in the matter of Illiquid Stock Options at BSE. Page 3 of 13 6. The allegations levelled against the Noticees in the SCN are summarized as below: a) The Noticee was one of the entities which indulged in reversal trades which allegedly created false and misleading appearance of trading, generating artificial volumes in the Stock Options Segment of BSE during the investigation period. b) The Noticee is alleged to have engaged in 6 such reversal trades in 3 unique contracts, which led to generation of artificial volume of 120000 units. These trades of the Noticee involved reversal with the same respective counterparty on the same day, but at different prices. c) The trades entered by the Noticee were reversed on the same day with same counterparty at a substantial price difference without any basis for significant change in the contract price which indicates that these trades are artificial and are non- genuine in nature. d) A summary of dealings of Noticee in 3 Stock Options contracts in which Noticee allegedly executed reversal trades during the investigation period, provided in the SCN is reproduced below: S. No. Contract Name Avg. Buy Rate (Rs.) Total Buy Volume (no. of units) Avg. Sell Rate (Rs.) Total Sell Volum e (no. of units) Total vol in the contra ct % of Artificial Volume generate d by Noticee in the contract to Noticee’ s Total Volume in the Contract % of Artificial Volume generated by Noticee in the contract to

Adjudication Order in respect of Lalit Kumar Saraf HUF in the matter of Illiquid Stock Options at BSE. Page 4 of 13 “3. Prohibition of certain dealings in securities No person shall directly or indirectly— (a) buy, sell or otherwise deal in securities in a fraudulent manner; (b) use or employ, in connection with issue, purchase or sale of any security listed or proposed to be listed in a recognized stock exchange, any manipulative or deceptive device or contrivance in contravention of the provisions of the Act or the rules or the regulations made there under; c) employ any device, scheme or artifice to defraud in connection with dealing in or issue of securities which are listed or proposed to be listed on a recognized stock exchange; (d) engage in any act, practice, course of business which operates or would operate as fraud or deceit upon any person in connection with any dealing in or issue of securities which are listed or proposed to be listed on a recognized stock exchange in contravention of the provisions of the Act or the rules and the regulations made there under.

Source: SecMarx — sebi:Order/MC/RM/2021-22/13490. 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.