sebi:Order/SD/KS/2021-22/14525

SEBI · SEBI · 2021-07-06 · Sandeep P Deore, 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. 18
• Reg. 3(a)

Parties

• Ms. Shubha Agarwal

Holding

The Noticee violated Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a) of the PFUTP Regulations, 2003 by executing non-genuine reversal trades in illiquid BSE stock options. A monetary penalty of Rs.5,00,000 under Section 15HA of the SEBI Act was imposed on Ms. Shubha Agarwal.

Full text

Adjudication Order in the matter of Dealings in Illiquid Stock Options at BSE Page 2 of 18 volume to the tune of 826.21 crore units in the Stock Options segment of BSE during the investigation period. In view of the large scale reversal of trades that were observed in the illiquid Stock Options segment at BSE, it is alleged that these trades were non-genuine in nature.

Adjudication Order in the matter of Dealings in Illiquid Stock Options at BSE Page 3 of 18 4 of the Adjudication Rules requiring the Noticee to show cause as to why an inquiry should not be held against it and why penalty, if any, should not be imposed on the Noticee under the provisions of section 15HA of the SEBI Act. The SCN was sent to the Noticee vide Registered Post AD and was duly served on the Noticee as per the Tracking details obtained from the India Post website. The SCN issued to the Noticee, inter alia, mentioned the following-: i. It is noted that Noticee was one of the various entities which were indulged in execution of such alleged non-genuine trades in Stock Options Segment of BSE during the Investigation period. Following points deal with the dealings of Noticee during the Investigation period and allegations against it for execution of non-genuine trades. Date Buyer Seller Buy Order Time Sell Order Time Trade Time Trade Rate (Rs.) Trade Quantity 31/03/2015 DAYANIDHI MERCANTILE PRIVATE LIMITED SHUBHA AGARWAL 11:46:59.080069 11:46:59.099060 11:46:59.099060 23 24000 31/03/2015 SHUBHA AGARWAL DAYANIDHI MERCANTILE PRIVATE LIMITED 11:46:55.098792 11:46:55.079841 11:46:55.098792 13 24000

Adjudication Order in the matter of Dealings in Illiquid Stock Options at BSE Page 4 of 18 an Artificial Volume was generated by the Noticee in the Stock Option Segment of BSE. These alleged non-genuine trades, executed by Noticee in above contract, had significant differential in buy rates and sell rates considering that the trades were reversed on same day v. In view of the foregoing, it is alleged that the Noticee, by indulging in execution of reversal trades in Stock Options with same entities on the same day, which were non-genuine in nature, has created false or misleading appearance of trading in the aforementioned contracts traded in the option segment of BSE. In view of the fact that these options contracts were illiquid in nature, having very small volume in trading, the Noticee allegedly created artificial volumes in stock options which was manipulative and deceptive in nature. Therefore, in view of above, it is alleged that the Noticee has violated Regulation 3(a), (b), (c), (d), 4(1) and 4(2)(a) of PFUTP Regulations, 2003

Source: SecMarx — sebi:Order/SD/KS/2021-22/14525. 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.