sebi:Order/VV/VS/2021-22/11990
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. 15I
- s. 15J
- s. 15F
- s. 28A
- s. 15I(1)
Regulations relied on
- SEBI (PFUTP) Regulations, 2003 — 3(a)
- SEBI (PFUTP) Regulations, 2003 — 3(b)
- SEBI (PFUTP) Regulations, 2003 — 3(c)
- SEBI (PFUTP) Regulations, 2003 — 3(d)
- SEBI (PFUTP) Regulations, 2003 — 4(1)
- SEBI (PFUTP) Regulations, 2003 — 4(2)(a)
Parties
- Radhe Krishna Fiscal Private Limited
Holding
The Noticee violated regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a) of the PFUTP Regulations by executing 166 non-genuine reversal trades creating artificial volume of 35,49,000 units in 27 stock option contracts, and is liable to a monetary penalty of Rs. 5,00,000 under Section 15HA of the SEBI Act.
Full text
Page 2 of 16 Private Limited (hereinafter referred to as the “Noticee”) was one of the various entities which indulged in execution of reversal trades in stock options segment of BSE during the Investigation Period. Such trades were observed to be non- genuine in nature and created false or misleading appearance of trading in terms of artificial volumes in stock options and therefore alleged to be manipulative, deceptive in nature. In view of the same, SEBI initiated adjudication proceedings against the Noticee for violation of the provisions of Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003 (hereinafter referred to as “PFUTP Regulations”).
Page 3 of 16 5. It was inter alia alleged in the SCN that the Noticee, through its trades, had indulged in creating artificial volume of 35,49,000 units through 166 non-genuine trades in 27 stock option contracts during IP.
Page 4 of 16 frequently traded in market. We traded in contracts of underlying scrips such as Adani Enterprises, Axis Bank, Bharti Airtel Ltd, Coal India Ltd, Dabur India, DLF Ltd, NTPC Ltd, ONGC Ltd, Voltas Ltd etc. (b) BSE and SEBI have themselves allowed and permitted trading in options for Tar months' with a strike price which are at large variance to current market price. The fact that such parameters are laid down is clearly indicative of fact that options will always be 'in the money' and 'out of money' and since regulators have themselves permitted trading in same, no adverse inference be drawn against us in this regard. (c) In derivative trading, traders often make profit or loss over a period of time since the market does not always behave as per their prediction/expectation. Thus, profit and loss is concomitant to trading in derivative segment. The mere fact that we traded in option segment cannot be a ground to rope us into present proceedings. (d) We traded in the stock market in ordinary course consequent to our bonafide trading in option segment, in most cases our trades were low percentage of market. Thus, it is erroneous to allege that our trades created artificial volume on BSE. (e) There was no major movement in price of underlying scrip which itself proves that our trades had no impact on market. Thus, our transactions neither distorted the equilibrium in market nor caused any loss or prejudice to investors at large. (f) We submit that any kind of alleged
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Source: SecMarx — sebi:Order/VV/VS/2021-22/11990. 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.