sebi:Order/VV/JR/2020-21/8582
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Facts / Headnote
Noticee found to have violated Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a) of SEBI (PFUTP) Regulations, 2003; liable 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
- Noticee (name not specified in excerpt)
Holding
The Noticee was held to have indulged in fraudulent and unfair trade practices by executing non-genuine reversal trades in 219 illiquid stock option contracts on BSE, creating artificial volume of 6,90,99,386 units, in violation of Regulations 3(a)-(d) and 4(1), 4(2)(a) of the PFUTP Regulations, 2003, and is liable under Section 15HA of the SEBI Act.
Full text
In the matter of dealings in Illiquid Stock Options at BSE Page 2 of 21 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 21 4. In view of the foregoing, it was alleged that the Noticee has entered into reversal trades in BSE ISO and these reversal trades were non-genuine in nature and have created false and misleading appearance of trading in terms of artificial volume in Stock Options and therefore alleged to be manipulative, deceptive in nature. The Noticee was alleged to have violated regulations 3(a), (b), (c) and (d), 4(1), 4(2)(a) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (hereinafter referred to as “PFUTP Regulations”).
In the matter of dealings in Illiquid Stock Options at BSE Page 4 of 21 8. In the interest of natural justice, another opportunity of personal hearing was given to the Noticee on July 17, 2020 vide newspaper publication. Accordingly, an intimation of the same was published in Times of India, Kolkata edition on June 18, 2020 and Bartaman, Kolkata edition on June 18, 2020. Once again, neither did anyone appear on the scheduled date nor any reply was received from the Noticee.
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Source: SecMarx — sebi:Order/VV/JR/2020-21/8582. 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.