sebi:Order/MC/VS/2021-22/12772
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Facts / Headnote
Violation established; penalty of Rs.1,00,00,000 imposed under Section 15HA
Provisions invoked
- s. 15
- s. 19
- s. 15H
- s. 15I
- s. 15J
Regulations
- Reg. 6
- Reg. 3
- Reg. 4(1)
- Reg. 3(a)
- Reg. 4(2)(a)
Parties
- J B Overseas
Holding
The Noticee violated Regulations 3(a), 4(1) and 4(2)(a) of the PFUTP Regulations, 2003 by executing non-genuine reversal trades in illiquid stock options on BSE, and is liable to monetary penalty of Rs.1,00,00,000 under Section 15HA of the SEBI Act.
Full text
Adjudication Order in respect of J B Overseas in the matter of dealing in Illiquid Options on the BSE Page 2 of 16 total market volume in Stock Options segment of BSE during the investigation period. Reversal trades have been considered those trades in which an entity reverse its buy or sell positions in a contract with subsequent sell or buy positions with the same counterparty during the same day. The said reversal trades are alleged to be non-genuine trades as they are not executed in normal course of trading, lack basic trading rationale, and allegedly lead to false or misleading appearance of trading in terms of generation of artificial volume, hence were deceptive and manipulative. Artificial volume is considered to be the volume (no. of units) reversed in both legs of said reversal trades while keeping out the volume, if any, which is not reversed.
Adjudication Order in respect of J B Overseas in the matter of dealing in Illiquid Options on the BSE Page 3 of 16 Adjudication Rules 1995 and Section 15HA of the SEBI Act. Subsequently, Shri Satya Ranjan Prasad was appointed as the AO by SEBI, on July 06, 2018.
Adjudication Order in respect of J B Overseas in the matter of dealing in Illiquid Options on the BSE Page 4 of 16 (c) Non-genuine trades and artificial volume are illustrated through the dealings of the Noticee in the contract viz, “ABNV15AUG1770.00PE” during the investigation period. (d) During the investigation period, total 2 trades for 42,000 units were executed in the said contract on July 08, 2015, wherein Noticee was party to all the said trades. (e) While dealing in the said contract on July 08, 2015, Noticee at 11:35:20 hrs entered into 1 sell trade with counter party viz, PRITI DEVI for 21,000 units at rate of Rs. 12.25 per unit. Thereafter, on the same day, within 4 seconds from the above trade, Noticee, at 11:35:24 hrs entered into 1 sell trade with same counterparty for 21,000 units at rate of Rs. 31.00 per unit. Thus, Noticee executed total 2 reversal trades (1 buy trade + 1 sell trade) with same counterparty viz, PRITI DEVI on the same day and with significant price differential in buy and sell rate. (f) The 2 trades were 100% of the total trades from the market in the said contract during the investigation period, and thereby, Noticee generated artificial volume of 42,000 units in the said contract during the investigation period. (g) Similarly, the Noticee allegedly indulged in execution of non-genuine trades and generation of artificial volume in total 1672 unique contracts, and executed 4968 non genuine trades, resulting in artificial volume of total 30,70
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Source: SecMarx — sebi:Order/MC/VS/2021-22/12772. 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.