sebi:Order/PM/AB/2019-20/6689

SEBI · SEBI · 2018-04-03 · Prasanta Mahapatra, Adjudicating Officer

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Facts / Headnote

Penalty imposed on Noticee for violation of PFUTP Regulations

Provisions invoked

• s. 15
• s. 15H
• s. 15I
• s. 15J

Regulations

• Reg. 3
• Reg. 2(1)(c)
• Reg. 4(1)
• Reg. 3(a)
• Reg. 4(2)(a)
• Reg. 2(1)(c)(2)
• Reg. 2(1)(c)(7)
• Reg. 2(1)(c)(8)

Parties

• Noticee (name not specified in text)

Holding

The Noticee violated Regulations 3(a), 4(1) and 4(2)(a) of the PFUTP Regulations by executing non-genuine reversal trades in illiquid stock options on BSE that created a false or misleading appearance of trading, and a penalty of Rs. 5,00,000 was imposed under Section 15HA of the SEBI Act.

Full text

Adjudication Order in the matter of dealing in Illiquid Stock Options at the BSE Page2 of 15 (b), (c), (d) and Regulation 4(1), 4(2) (a) of the SEBI (Prohibition of Fraudulent and Unfair Trading Practices related to Securities Markets) Regulations, 2003 (hereinafter be referred to as, the “PFUTP Regulations”).

Adjudication Order in the matter of dealing in Illiquid Stock Options at the BSE Page3 of 15 c) The trades entered by the Noticee were reversed on the same day with same counterparties 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 the Noticee in the 21 Stock Options contracts in which the Noticee executed non-genuine reversal trades during the Investigation Period are as under: Table 1: Summary of trading of the Noticee in Illiquid Stock Options on BSE S. No. Contract Name Avg. Buy Rate (Rs.) Total Buy Volume (no. of units) Avg. Sell Rate (Rs.) Total Sell Volume (no. of units) % of Artificial trades of the Noticee in the contract to Total trades in the contract % of Artificial Volume generated by Noticee in the contract to Total Volume in the Contract 1 ALBK15JAN110.00PEW3 1.80 588000 0.10 588000 100% 100% 2 ALLD15JAN58.00CEW3 2.30 320000 0.45 320000 29% 36% 3 CRGL15APR145.00CEW2 21.61 400000 11.65 400000 60% 94% 4 DISH15APR70.00PE 2.30 412000 0.10 412000 43% 94% 5 ENGI15APR170.00CE 27.80 42000 17.00 42000 100% 100% 6 IDBI15APR70.00PE 2.27 384000 0.20 384000 21% 52% 7 IDEA15APR210.00PE 24.40 56000 11.40 56000 50% 82% 8 INCM15APR85.00CE 12.42 124000 8.30 124000 43% 34% 9 JAIA15APR18.00PE 1.60 16000 0.05 16000 100% 100% 10 JAIA15APR20.00PE 1.44 528000 0.10 528000 30% 75% 11 JAIA15JAN20.00PEW3 1.10 552000 0.10 552000 57% 5

Adjudication Order in the matter of dealing in Illiquid Stock Options at the BSE Page4 of 15 e) By indulging in execution of aforesaid non-genuine reversal trades, the Noticee has violated Regulations 3(a),(b),(c),(d) and 4(1), 4(2)(a) of the PFUTP Regulations, text of which is reproduced as under: “SEBI (Prohibition of Fraudulent and Unfair Trading Practices Related to Securities Markets) Regulations, 2003

Source: SecMarx — sebi:Order/PM/AB/2019-20/6689. 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.