sebi:WTM/RKA/ISD/90/2016

SEBI · SEBI · Rajeev Kumar Agarwal, Whole Time Member

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

Interim restraints continued; request by Jai Annanya/Adventz Finance Private Limited to sell/assign entire demat holding to repay claimed ICD or utilize entire escrow proceeds rejected; only common limited relief allowed to sell securities (other than suspended) under supervision with proceeds in escrow and utilization up to 25% of portfolio value for business/exigencies.

Provisions invoked

• s. 11
• s. 11(4)
• s. 19
• s. 15T

Parties

• Jai Annanya Investments Private Limited

Holding

SEBI continued the interim directions against Jai Annanya in the illiquid stock options matter and refused to permit full release/off-market transfer of its frozen securities to repay the claimed Rs.40 crore ICD from Adventz, granting only the common limited relief to sell holdings under exchange supervision with proceeds in escrow.

Full text

Order in the matter of Illiquid Stock Options Page 2 of 23 v) The impugned order clearly indicates an excessive and improper exercise of the powers conferred upon SEBI under section 11 of the SEBI Act, 1992 as there was no emergent scenario prevailing at the time of the passing of the impugned order which warranted such a harsh direction. vi) The allegations levied are baseless, bald, sweeping, vague, unfounded, misconceived and speculative, based on assumptions, surmises and conjectures and are completely contrary to the factual position on record. vii) SEBI has not provided it with the documents referred to and relied upon for passing of the impugned order. For want of all the documents / material based on which the

Order in the matter of Illiquid Stock Options Page 3 of 23 resulted into reversals. If there was a prior understanding then all their orders should have resulted into trades and all their trades should have led to a reversal of the same. xiv) The strike prices at which such options contracts can be entered into are not determined by the individual investors, but are preloaded on the exchange platform. Every options contract has an "At the Money" strike price and a minimum of 5 “In the Money" and "Out of the Money" strike prices at any given time. The same can also extend to a maximum of 10 "In the Money" and "Out of the Money” strike prices also. The trades in question were also executed within these limits. xv) The impugned order does not provide any data of the prevailing intrinsic value at the time of transactions. xvi) The entities who have booked profits or losses lesser than 5 crore have admittedly not been debarred and are carrying on with such trading activity. xvii) The impugned order alleges Jai Annanya of committing fraud, but does not describe the act or omission committed by them. xviii) There is no justification for imposing a blanket ban which extends to restricting them from trading in the cash segment of the Securities market also. xix) The impugned order does in no manner restrict such deceptive trades from taking place. Any market constituent can enter into such trades on the floor of exchange at such irrational prices as there is no restrictions on executi

Order in the matter of Illiquid Stock Options Page 4 of 23 4. Subsequently, vide its two separate letters both dated January 5, 2016, Jai Annanya further represented that – a) the inspection of documents sought by it was incomplete and inspection of balance documents may immediately be provided so as to enable it to present the entire set of

Source: SecMarx — sebi:WTM/RKA/ISD/90/2016. 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.