sebi:Order/SBM/AK/2021-22/15702

SEBI · SEBI · 2021-07-27 · 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

• Amit Jalan

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. A monetary penalty of Rs.5,00,000 under Section 15HA of the SEBI Act was imposed.

Full text

___________________________________________________________________________ Adjudication order in respect of Amit Jalan in the matter of dealing in Illiquid Stock Options at BSE Page 2 of 14 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 Amit Jalan in the matter of dealing in Illiquid Stock Options at BSE Page 3 of 14

___________________________________________________________________________ Adjudication order in respect of Amit Jalan in the matter of dealing in Illiquid Stock Options at BSE Page 4 of 14 a. The Noticee submitted that, the following was not provided to the Noticee: (i) the Investigation report, relied upon by SEBI (ii) No Cross Examination of Counterparties is provided. (iii) Any other Investigation Report or incriminating reports or materials. In this regard, reliance was placed inter alia on following decisions: i. T. Takano Vs. SEBI & Anr.(Hon’ble Supreme Court in Civil Appeal No. 487-488 of 2022) ii. Nirmala Didwania Vs. SEBI and Anr. (Hon’ble Guwahati High Court in WP(C)/767/2022) b. The Noticee has contended that there was delay in initiation of proceedings. In this regard, reliance was placed inter alia on the following decision: i. Ashlesh Gunavantbhai Shah Vs. SEBI and ors. (Hon’ble SAT Apeal No. 169, 171, 172, 231 of 2019) c. The trades executed were on the floor of the exchange. No warning or caution were given by BSE or existing system. The observation that Noticee had dealt in illiquid stocks is absolutely incorrect. Trades were done in normal course of business. None of the trades are deceptive in nature nor do they have any impact on the investors or their investment decisions, which are a ‘sine qua non’ for a transaction to be rendered as ‘fraudulent’. No inducement and No charge of price manipulation and the trades did not cause loss to investors.

Source: SecMarx — sebi:Order/SBM/AK/2021-22/15702. 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.