sebi:Order/VV/VS/2021-22/12322
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Facts / Headnote
Violation established; penalty imposed
Provisions invoked
- s. 15
- s. 19
- s. 15H
- s. 15I
- s. 15J
- s. 15F
- s. 28A
- s. 15I(1)
Regulations
- Reg. 7
- Reg. 3
- Reg. 3(a)
Parties
- Prime Gold International Limited
Holding
The Noticee violated Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a) of the PFUTP Regulations by executing 97 non-genuine reversal trades creating artificial volume, and a penalty of Rs. 6,40,000 under Section 15HA of the SEBI Act was imposed.
Full text
Page 2 of 16 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 5,12,15,000 units through 97 non-genuine trades in 36 stock option contracts during IP.
Page 4 of 16 9. The Noticee, vide its letter dated March 25, 2021, made written submissions in the matter. The Noticee inter alia made the following contentions in its aforesaid written submissions dated March 25, 2021: (a) SEBI has not provided any evidence or proof to show that our trades were fraudulent. (b) The trades were executed on the floor of the exchange with due compliance with all the rules and regulations of the exchanges (c) At no point of time was there any warning or any observation from the regulators about the stock options& underlying scrips executed by us. (d) The trades in question were in the normal course of business and there is nothing amiss in the trades executed by us. (e) For the transaction to be termed fraudulent, as per the definition of 'fraud', there has to be an “inducement” and SEBI has not even alleged inducement in the entire Show Cause Notice. (f) None of the trades are deceptive in nature or have any impact on the investors or their investment decision which is a sine qua non of "fraud”. (g) There is no nexus, directly or indirectly with the counter party and any of their brokers; (h) The Show Cause Notice does not specify and consider facts matrix of our dealings in stock options segment of BSE. It does not state the reasons, rational, cause of action, locus and invoking of jurisdiction after almost three (3) years from the dates of settled transactions. The Show Cause Notice is therefore arbitrary. (i) With respect to observation that
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Source: SecMarx — sebi:Order/VV/VS/2021-22/12322. 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.