sebi:Order/PM/AB/2019-20/6694

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)

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, 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 Regulation 3(a), (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 30 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 AHEL15FEB1290.00PE 30.00 69000 1.00 69000 100% 100% 2 ALLD15MAR60.00PEW3 2.25 384000 0.05 384000 9% 22% 3 ALLD15MAR70.00PEW2 1.40 1864000 0.10 1864000 33% 88% 4 ALLD15MAR80.00CEW2 1.55 160000 0.05 160000 31% 26% 5 ANBK15MAR65.00PEW3 2.23 272000 0.05 272000 14% 16% 6 ARVI15FEB310.00CE 14.30 55000 2.00 55000 100% 100% 7 BOSH15FEB26400.00CE 555.48 2875 20.00 2875 67% 92% 8 BOSH15MAR26000.00PEW2 639.50 3250 79.54 3250 30% 33% 9 BOSH15MAR26400.00CEW1 817.00 3000 150.00 3000 14% 22% 10 GMRI15MAR12.00PEW3 0.55 549000 0.05 549000 10% 32% 11 HNDL15MAR155.00PEW1 3.75 136000 0.10 1

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/2019-20/6694. 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.