sebi:Order/SBM/AK/2022-23/16842

SEBI · SEBI · 2021-07-27 · Suresh B Menon, Adjudicating Officer

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

Penalty imposed on Noticee for violation of PFUTP Regulations

Provisions invoked

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

Regulations

• Reg. 3
• Reg. 4(1)
• Reg. 3(a)

Parties

• Anand Jain HUF

Holding

The Noticee violated regulation 3(a), 4(1) and 4(2)(a) of the PFUTP Regulations by executing reversal/non-genuine trades in illiquid stock options at BSE, creating artificial volume of 2,30,000 units across 5 contracts, and a penalty of Rs.5,00,000 was imposed under section 15HA of the SEBI Act.

Full text

___________________________________________________________________________ Adjudication order in respect of Anand Jain HUF in the matter of dealing in Illiquid Stock Options at BSE Page 2 of 13 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 Anand Jain HUF in the matter of dealing in Illiquid Stock Options at BSE Page 3 of 13

___________________________________________________________________________ Adjudication order in respect of Anand Jain HUF in the matter of dealing in Illiquid Stock Options at BSE Page 4 of 13 i. SAT vide order dated January 31, 2020 set aside the order of penalty by SEBI for inordinate delay of 7 years in issuance of SCN in Appeal No. 169, 171, 172, 231, 264, 266, 277, 278, 279, 280 & 281 of 2019. ii. SAT vide order dated August 22, 2019 dismissed the order of penalty by SEBI for inordinate delay of 8 years in issuance of SCN in Appeal No. 417 of 2018. iii. SEBI Vs Bhavesh Pabari (2019)SCC Online SC 294 iv. Shriram Insight Share Brokers Ltd Vs SEBI decided by Hon’ble SAT on January 04, 2022. b. SEBI instead of booking Brokers and Market manipulators has sent the SCN to a small investor, SEBi is acting against its own preamble. c. Since there is no privity of contract between the Noticee and SEBI, and BSE has the jurisdiction in the matter and BSE has not found any illegality in the trades of Noticee. Hence, SCN issued by SEBI is without jurisdiction. d. As there aren’t any investor complaints nor there is any repetition of trades, also the Noticee has suffered loss, hence no penalty could be levied in view of the Section 15 J of the SEBI act. e. SEBI cannot find foul with the Noticee for its own failure of surveillance mechanism and failure of BSE in checking the notorious mechanism of options trade reversal. f. SEBI came into possession of information of options trade thr

Source: SecMarx — sebi:Order/SBM/AK/2022-23/16842. 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.