sebi:Order/SV/RM/2023-24/29089

SEBI · SEBI · 2018-09-21 · Shashi Kumar Valsakumar, Adjudicating Officer

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Facts / Headnote

Adjudication proceedings initiated vide SCN dated September 21, 2018 disposed of; violations not established; no penalty imposed

Provisions invoked

• s. 15
• s. 15H
• s. 15I
• s. 15J

Regulations

• Reg. 3
• Reg. 3(a)

Parties

• Kusum Traders
• Sudeb Ghosh

Holding

The adjudication proceedings against Kusum Traders / Mr. Sudeb Ghosh for alleged non-genuine reversal trades in illiquid stock options at BSE were disposed of without penalty as the violations of PFUTP Regulations were not established.

Full text

Adjudication Order in respect of Kusum Traders in the matter of dealings in Illiquid Stock Options at BSE Page 2 of 9 to as ‘BSE’) and, pursuant to this, it conducted investigation into the trading activities of certain entities in illiquid Stock Options at the BSE for the period April 01, 2014 to September 30, 2015 (hereinafter be referred to as ‘Investigation Period’). Investigation revealed that during the Investigation Period, a total of 2,91,643 trades (comprising 81.38% of all the trades executed in the Stock Options Segment of BSE) involved reversal of buy and sell positions by the clients and counterparties in a contract. The reversal trades are considered as non- genuine trades, if it involves an entity reversing its buy or sell positions in a contract with subsequent sell or buy positions with the same counterparty during the same day. In this regard, artificial volume is considered as the volume (no. of units) reversed in non-genuine trades, comprising both original volume and reversed volume while keeping out the volume which is not reversed. Noticee was allegedly one of the various entities which were indulged in execution of such alleged non-genuine trades.

Adjudication Order in respect of Kusum Traders in the matter of dealings in Illiquid Stock Options at BSE Page 3 of 9 6. Hon’ble Securities Appellate Tribunal vide its order dated February 21, 2023, set aside the aforesaid adjudication order dated July 23, 2019, and inter-alia directed as follows: “3. Considering the fact that there is a statement of Mr. Devesh Upadhyaya who has made a statement before the Income Tax Authorities that he was trading exclusively on behalf of M/s. Kusum Traders coupled with the fact that there is a serious allegation of misuse of the PAN of the appellant and coupled with the fact that an ex parte order has been passed, we set aside the impugned order and remit the matter to the Adjudicating Officer (‘AO’ for short) to decide the matter afresh in the light of the observation made above. The AO will consider the fact as to whether the appellant is the sole proprietor in M/s. Kusum Traders or not.

Adjudication Order in respect of Kusum Traders in the matter of dealings in Illiquid Stock Options at BSE Page 4 of 9 a. SEBI issued SCN in the name of Kusum Traders wherein his PAN number is mentioned, and the SCN was never served to him. b. The AO order dated July 23, 2019 was passed against Kusum Traders and imposed penalty of Rs. 5 lakh. c. Since his PAN number was mentioned in the order, SEBI Recovery Department recovered Rs.22000/- from his account. d. Hon’ble SAT remanded the matter back to SEBI for passing fresh order. e. His name and documents have been misused, signature has been forged by someone in connivance with the Broker etc. to open proprietorship trading account in the name of Kusum traders, demat account and bank account in his name. f. He has no connection with Kusum traders.

Source: SecMarx — sebi:Order/SV/RM/2023-24/29089. 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.