sebi:Order/VV/JR/2019-20/6943
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Facts / Headnote
Violation established; penalty of Rs 6,20,000 imposed under Section 15HA of SEBI Act
Provisions invoked
- s. 15
- s. 15H
- s. 15J
- s. 28A
Regulations
- Reg. 4
- Reg. 3
- Reg. 2
- Reg. 3(a)
Parties
- YT Capital Private Limited
Holding
The Noticee, YT Capital Private Limited, violated Regulations 3(a), (b), (c), (d) and 4(1), 4(2)(a) of PFUTP Regulations by executing 144 non-genuine reversal trades in 41 illiquid stock option contracts creating artificial volume, and is liable to a monetary penalty of Rs 6,20,000 under Section 15HA of the SEBI Act.
Full text
In the matter of dealings in Illiquid Stock Options at BSE Page 2 of 18 2. SEBI conducted an investigation into the trading activities of certain entities in ISO, BSE for period April 1, 2014 to September 30, 2015 (hereinafter referred to as “Investigation Period”/IP”). Pursuant to investigation, it was observed that during IP, total 2,91,643 trades comprising substantial 81.38% of all the trades executed in Stock Options of BSE were non-genuine trades. The aforesaid non- genuine trades resulted in creation of artificial volume to the tune of 826.21 crore units or 54.68% of the total market volume in Stock Options segment of BSE during the IP. It was also noted that said non-genuine trades were not restricted to any specific contract or between any specific set of entities.
In the matter of dealings in Illiquid Stock Options at BSE Page 3 of 18 order was reversed at `17.8 per unit on the same day between same counter parties at 09:59:19 i.e. within 58 seconds.
In the matter of dealings in Illiquid Stock Options at BSE Page 4 of 18 8. The Noticee vide letter dated December 6, 2018 sought inspection of documents. In order to comply with the principles of natural justice an opportunity of personal hearing was given to the Noticee on October 10, 2019 vide letter dated September 20, 2019. The Noticee, vide letter dated October 9, 2019 sought for an adjournment. Another opportunity of personal hearing was given to the Noticee on November 14, 2019 vide notice dated October 23, 2019. Subsequently, the Noticee, vide letter dated November 1, 2019 forwarded reply dated October 31, 2019 stating, inter alia, the following: In addition to a fool proof Surveillance Mechanism at BSE, Byelaw No. 1.46 of the Derivatives Segment gives BSE the power to annul the trades in Future & Options segment wherever they observe that the trades were executed for fraud and/or wilful misrepresentation. It is to be noted that all the options trades executed by us were genuine and in accordance with the Rules, Regulations and Byelaws of BSE, so same were cleared by Surveillance Mechanism of BSE and also not investigated by BSE under Byelaw No 1.46 (a) and (b) of the Derivatives Segment for annulment. In view of the existence of a fool proof surveillance system at SEBI and BSE and as claimed by them, no trade, which is fraudulent/ manipulative etc. can be done by any investor as according to their claim all trades which are manipulative/ fraudulent come to their
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Source: SecMarx — sebi:Order/VV/JR/2019-20/6943. 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.