sebi:Order/SBM/VS/2021-22/13279

SEBI · SEBI · 2021-04-26 · Suresh B Menon, Adjudicating Officer

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Facts / Headnote

Penalty imposed on the Noticee for violation of PFUTP Regulations

Provisions invoked

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

Regulations

• Reg. 3
• Reg. 4(1)
• Reg. 3(a)

Parties

• Aachman Vanijya Private Limited

Holding

The Noticee violated regulation 3(a), 4(1) and 4(2)(a) of the PFUTP Regulations by executing 26 non-genuine reversal trades in 3 illiquid stock option contracts at BSE, generating artificial volume of 24,58,000 units, and is liable to a penalty of ₹5,00,000 under section 15HA of the SEBI Act.

Full text

___________________________________________________________________________ Adjudication order in respect of Aachman Vanijya Private Limited in the matter of Illiquid Stock Options at BSE Page 2 of 11 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 Trading 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 Aachman Vanijya Private Limited in the matter of Illiquid Stock Options at BSE Page 3 of 11 c. It is observed from the table above that the trades entered by the Noticee in the contract of “SAIL15AUG65.00CEW2” on August 07, 2015 with its counterparty viz. Naina Dhanania 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 as 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 reversed in non-genuine trades is 3,68,000 shares comprising both volume of initial trade and volume of reversal trade, while not considering the volume which is not reversed. d. It is further observed from the trade data of the Noticee that it has allegedly entered into non-genuine trades in 3 contracts wherein it executed a total of 26 trades all of which were, prima facie, non-genuine trades. In view of this, it is alleged that such fraudulent trades of the Noticee had resulted into creation of artificial volume of total 24,58,000 units. e. In this regard, details of all the alleged non-genuine trades of the Noticee in Stock Option Segment of BSE during relevant period are attached as Annexure B. From the pe

___________________________________________________________________________ Adjudication order in respect of Aachman Vanijya Private Limited in the matter of Illiquid Stock Options at BSE Page 4 of 11 c. The alleged trades have all traits of being genuine and therefore cannot be categorised as non-genuine. These trades were executed on the anonymous platform of the Exchange, without any knowledge of counter party, at price ranges that were permitted by the Exchange and SEBI and the obligation arising out of it have been settled through the clearing mechanism of the Exchange. d. The SCN does not provide an iota of evidence as to how it was related or connected to the counterparties. Therefore, without the theory of collusion or meeting of minds between two parties being established, the allegation in the SCN do not hold good. In this regards reliance was placed on decision of the Hon’ble Securities Appellate Tribunal in following orders: i. Jagruti Securities vs. SEBI [2008 SCC Online SAT 1848 : 2008SAT 184] ii. S.P.J. Stock Brokers Pvt. Ltd. vs SEBI [2013 SCC Online SAT 67 : 920130 SAT 17] iii. HB Stockholdings Limited vs. SEBI [2013 SCC Online SAT 56 : 920130 SAT 44] iv. R.K. Global vs. SEBI [Appeal No. 158 of 2008, Date of Decision 16th September, 2010] e. With regard to the impositions of penalty lesser than the minimum prescribed penalty reliance was placed on following Adjudicating Orders of AOs: i. AO order added 26th February, 2021 in the matte rof Octant Interactive T

Source: SecMarx — sebi:Order/SBM/VS/2021-22/13279. 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.