sebi:Order/MR/VV/2021-22/14953
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. 15H
- s. 15I
- s. 15J
- s. 15
- s. 15F
- s. 28A
Regulations
- Reg. 3
- Reg. 3(a)
- Reg. 26
Parties
- Sudhir Kumar Gupta HUF
Holding
The Noticee, Sudhir Kumar Gupta HUF, was held 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 on BSE, and a penalty of INR 5,00,000 was imposed under section 15HA of the SEBI Act.
Full text
Page 2 of 16 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 July 2, 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 July 6, 2021.
Page 3 of 16 trading, generating artificial volumes in stock options segment of the BSE during the investigation period; b. The Noticee had engaged in two (2) trades in one (1) unique contract which led to generation of artificial volume in the aforesaid unique contract; 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, which indicates that these trades were artificial and non-genuine in nature; and d. The Noticee’s two (2) trades while dealing in the above said contract during the investigation period had allegedly generated artificial volume of 76,000 units, which made up 11.05% of total market volume in the said contract during the investigation period and 48.71% of total market volume in the said contract on March 25, 2015, i.e., the day on which the Noticee traded.
Page 4 of 16 c. That the SCN does not contain any details with respect to the objective criteria used to establish the fraudulent nature of the trades executed by the Noticee; d. That the SCN does not contain any facts/details to show about the exact manner in which the Noticee’s trades violated each provision of law; e. That neither SEBI nor BSE had issued any warnings to the investors against execution of trades on BSE’s F&O Segment; and f. That large differences between consecutive last traded prices of option contracts is a common phenomenon and the same cannot be per se called fraudulent in nature.
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Source: SecMarx — sebi:Order/MR/VV/2021-22/14953. 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.