sebi:Order/SBM/VS/2021-22/15196

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

Provisions invoked

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

Regulations

• Reg. 3
• Reg. 4(1)
• Reg. 3(a)

Parties

• Ms. Achla Jain

Holding

The Noticee violated regulations 3(a), 4(1) and 4(2)(a) of the PFUTP Regulations by executing 6 non-genuine reversal trades in 2 illiquid BSE stock-option contracts creating artificial volume, and is liable to a monetary penalty of Rs 5,00,000 under section 15HA of the SEBI Act.

Full text

___________________________________________________________________________ Adjudication order in respect of Ms. Achla Jain in the matter of dealing in Illiquid Stock Options at BSE Page 2 of 12 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’).

___________________________________________________________________________ Adjudication order in respect of Ms. Achla Jain in the matter of dealing in Illiquid Stock Options at BSE Page 3 of 12 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 16,000 units comprising both volume of initial trade and volume of reversal trade, while not considering the volume which is not reversed. In the process, it is observed that the Noticee had made a profit of ₹61,200/-. d. It is further observed from the trade data of the Noticee that it has allegedly entered into non-genuine trades in 2 contracts wherein it executed a total of 6 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 1,52,000 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 perusal of the trade data of the alleged non-genuine trades of the Noticee, it is observed that Noticee has allegedly executed

___________________________________________________________________________ Adjudication order in respect of Ms. Achla Jain in the matter of dealing in Illiquid Stock Options at BSE Page 4 of 12 d. The Noticee denied that she had indulged in any reversal trades which allegedly created false and misleading appearances of trading or generating artificial volume as alleged. e. All of her trades were in the anonymous order matching system of the exchange, wherein it is impossible to know the identity of the counterparties. The alleged matching with the counter parties, if, any, is by coincidence and not by design. f. Admittedly, all the impugned trades of the Noticee have been executed by her through her broker on the platform of the stock exchange within the permissible price bands.

Source: SecMarx — sebi:Order/SBM/VS/2021-22/15196. 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.