sebi:Order/PM/AB/2019-20/6695
Facts / Headnote
Penalty of Rs. 5,00,000 imposed on the Noticee under Section 15HA of the SEBI Act for violation of Regulation 3(a), 4(1) and 4(2)(a) of the PFUTP Regulations.
Provisions invoked
- s. 15
- s. 15H
- s. 15I
- s. 15J
Regulations relied on
- SEBI (PFUTP) Regulations, 2003 — 3(a)
- SEBI (PFUTP) Regulations, 2003 — 4(1)
- SEBI (PFUTP) Regulations, 2003 — 4(2)(a)
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, creating 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 14 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 14 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 19 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 AMBC15JAN225.00CE 21.03 101000 32.55 101000 100% 100% 2 AMTK15JAN160.00CEW4 12.35 112000 20.00 112000 33% 53% 3 APLT15JAN250.00PEW4 8.95 102000 19.03 102000 50% 50% 4 ARVI15JAN255.00CE 15.08 101000 22.35 101000 67% 55% 5 BIOC15JAN390.00CE 17.10 101000 30.05 101000 100% 100% 6 BIOC15JAN400.00CEW4 17.90 100500 26.70 100500 100% 100% 7 CANB15JAN450.00CE 9.95 121000 18.05 121000 45% 55% 8 CARN15JAN220.00CEW4 11.90 101000 17.92 101000 100% 100% 9 CARN15JUN165.00CEW2 15.70 204000 30.40 204000 50% 89% 10 DISH15JUN100.00CEW3 3.55 68000 7.80 68000 33% 21% 11 DLFL15JAN130.00CE 11.
Adjudication Order in the matter of dealing in Illiquid Stock Options at the BSE Page4 of 14 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
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