sebi:Order/SBM/AK/2021-22/15502

SEBI · SEBI · 2021-04-26 · SURESH B MENON, ADJUDICATING OFFICER

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Facts / Headnote

Violation found; penalty of Rs.5,00,000 imposed under Section 15HA of the SEBI Act

Provisions invoked

• s. 15
• s. 19
• s. 15H
• s. 15J
• s. 28A

Regulations

• Reg. 3
• Reg. 4(1)
• Reg. 3(a)

Parties

• Abhinav Garg HUF

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 at BSE, and is liable to a penalty of Rs.5,00,000 under Section 15HA of the SEBI Act.

Full text

___________________________________________________________________________ Adjudication order in respect of Abhinav Garg HUF in the matter of dealing in Illiquid Stock Options at BSE Page 2 of 15 had indulged in the execution of the non-genuine trades in the Stock Options Segment at BSE during the above referred investigation period. It was observed that Noticee had entered into reversal trades with its counterparties which involved squaring off transactions with significant difference in sell value and buy value of the transactions. It was therefore alleged that Noticee had executed the reversal trades, which were non-genuine in nature and have created false or misleading appearance of trading in terms of creation of artificial volume in the Stock Options segment at BSE and therefore, it is alleged that the Noticee has violated the provisions of regulations 3(a), (b), (c), (d) and regulation 4(1), 4(2) (a) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Markets) Regulations, 2003 (hereinafter referred to as ‘PFUTP Regulations’). In view of the above reasons, adjudication proceedings have been initiated against the Noticee under the provisions of section 15 HA of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as ‘SEBI Act’). APPOINTMENT OF ADJUDICATING OFFICER

___________________________________________________________________________ Adjudication order in respect of Abhinav Garg HUF in the matter of dealing in Illiquid Stock Options at BSE Page 3 of 15 during the Investigation period. Following points deals with the dealings of Noticee during the Investigation period and allegations against it for execution of non-genuine trades. b. For the purpose of illustration of non-genuine trades and creation of artificial volume by the Noticee, details of trading done by the Noticee in the contract viz. “IDEA15FEB150.00PE” on February 18, 2015 is given below: Date Buyer Seller Buy Order Time Sell Order Time Trade Time Trade Rate (Rs.) Trade Quan 18/02/2015 RAMESH MERCANTILE PVT LTD ABHINAV GARG HUF 14:36:10.246952 14:36:10.228450 14:36:10.246952 1.65 150 18/02/2015 ABHINAV GARG HUF RAMESH MERCANTILE PVT LTD 14:36:15.728711 14:36:15.747464 14:36:15.747464 0.65 150 c. It is observed from the table above that the trades entered by the Noticee in the contract of “IDEA15FEB150.00PE” on February 18, 2015, with its counterparty viz. Ramesh Mercantile Pvt Ltd were reversed between the Noticee and the same counterparty on the same day resulting in reversal of trades which are, prima facie, considered to be non-genuine. Therefore, in the process artificial volume in the stock option contract at BSE has been generated by the Noticee through such non-genuine trades. From the table above, it is observed that the artificial volume created as no. of units

___________________________________________________________________________ Adjudication order in respect of Abhinav Garg HUF in the matter of dealing in Illiquid Stock Options at BSE Page 4 of 15

Source: SecMarx — sebi:Order/SBM/AK/2021-22/15502. 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.