sebi:Order/VR/SS/2022-23/15974

SEBI · SEBI · 2018-04-05 · Venkateswaran Ramakrishnan, Adjudicating Officer

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Facts / Headnote

Penalty imposed on the Noticee for dealing in illiquid stock options through non-genuine reversal trades

Provisions invoked

• s. 15
• s. 19
• s. 15H
• s. 15J
• s. 11C
• s. 28A
• s. 24

Regulations

• Reg. 3
• Reg. 2(1)(c)
• Reg. 2(1)
• Reg. 4(2)(a)
• Reg. 3(a)
• Reg. 2(1)(c)(8)

Parties

• Vinod Somani HUF

Holding

The Noticee violated Regulations 3(a), 3(b), 3(c), 3(d), 4(1) and 4(2)(a) of the PFUTP Regulations by executing non-genuine reversal trades in an illiquid stock options contract, and a penalty of ₹5,00,000 (the minimum under Section 15HA) was imposed.

Full text

2 Adjudication Order in respect of Vinod Somani HUF in the matter of Dealing in Illiquid Stock Options at BSE Ltd. 3. Pursuant to investigation, it was observed that during the investigation period, a total of 2,91,744 trades comprising 81.41 per cent of all the trades executed in stock options contracts in the equity derivatives segment of BSE were trades which involved reversal of buy and sell positions by the clients and counterparties in a contract. Further, out of 21,652 entities that had traded in stock options contracts in the equity derivatives segment of BSE during the investigation period, 14,720 entities were involved in executing such reversal trades/non-genuine trades.

3 Adjudication Order in respect of Vinod Somani HUF in the matter of Dealing in Illiquid Stock Options at BSE Ltd. 2. APPOINTMENT OF ADJUDICATING OFFICER 7. SEBI, in exercise of the powers conferred under Section 19 of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as “SEBI Act”) read with Section 15-I(1) of the SEBI Act and Rule 3 of the Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995 (hereinafter referred to as “SEBI Rules”) read with Section 19 of the SEBI Act, appointed the undersigned as the Adjudicating Officer vide order dated July 02, 2021, to enquire into and adjudge under Section 15 HA of the SEBI Act the alleged violations by the Noticee. The proceedings of appointment were communicated to the undersigned vide Communique dated July 06, 2021 to conduct the Adjudication Proceedings in the manner specified under Rule 4 of the SEBI Rules read with sub-sections (1) and (2) of Section 15-I of the SEBI Act.

4 Adjudication Order in respect of Vinod Somani HUF in the matter of Dealing in Illiquid Stock Options at BSE Ltd. 2015, at 15:03:02.32 hrs, the Noticee entered into a buy trade with counterparty J B Overseas for 1,20,000 units at ₹ 9.60 per unit, which was reversed by a sell trade at 15:03:08.62 hrs with the same counterparty for 1,20,000 units at ₹ 12.20 per unit. It is alleged that two trades for 2,40,000 units executed by the Noticee in the said contract on June 29, 2015 were non-genuine.

Source: SecMarx — sebi:Order/VR/SS/2022-23/15974. 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.