sebi:Order/MR/VB/2021-22/14793
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Facts / Headnote
Violation of PFUTP Regulations established; penalty of INR 5,00,000 imposed under section 15HA of the SEBI Act
Provisions invoked
- s. 15
- s. 15H
- s. 15I
- s. 15J
- s. 15F
- s. 28A
- s. 149
Regulations
- Reg. 3
- Reg. 3(a)
- Reg. 26
Parties
- Sudhir Kedia (PAN: AGAPK6830E)
Holding
The Noticee was found to have violated regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a) of the PFUTP Regulations by executing non-genuine reversal trades in stock options at BSE, and a penalty of INR 5,00,000 was imposed under section 15HA of the SEBI Act.
Full text
Page 2 of 19 B. APPOINTMENT OF ADJUDICATING OFFICER 3. SEBI initiated adjudication proceedings and appointed the undersigned as the adjudicating officer under section 15I of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as the “SEBI Act”) read with rule 3 of the Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995 (hereinafter referred to as the “Adjudication Rules”) vide order dated April 30, 2021 to inquire into and adjudge under section 15HA of the SEBI Act, against the Noticee for the alleged violation of the aforesaid provisions of the PFUTP Regulations. The said appointment was communicated vide communiqué dated June 28, 2021.
Page 3 of 19 c) In the said contract, the trades entered by the Noticee were reversed with the same counterparty at a substantial price difference without any basis for significant change in the contract price, which indicates that these trades were artificial and non-genuine in nature; d) The Noticee’s three (3) trades while dealing in the above said contract during the investigation period had allegedly generated artificial volume of 1,04,000 units, which made up 5.75% of total market volume in the said contract during the investigation period and 50% of total market volume in the said contract on January 27, 2015.
Page 4 of 19 circumstances owing to Covid-19 pandemic, the hearing was scheduled through video conferencing on Webex platform. On the scheduled date of hearing, the Authorized Representative (hereinafter referred to as the “AR”) of the Noticee, namely, Subash Agarwal & Associates, appeared before me through video conferencing. The AR reiterated the submissions made in the reply and requested to file further submissions. The AR vide e-mail dated October 25, 2021 made further submissions, wherein it was, inter alia, stated as follows: a) That the burden of proof to prove the facts alleged against the Noticee is unequivocally cast upon the Adjudicating Authority; b) No proof of causal connection between the Noticee and the counter-party has been provided; c) That the transaction has not adversely impacted any third party; d) That as per the Risk Disclosure Document issued by SEBI, the possibility of a wide spread price difference in the illiquid options contract prevails. Since there is no price band mechanism in place, the alleged trades were traded / executed genuinely.
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Source: SecMarx — sebi:Order/MR/VB/2021-22/14793. 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.