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It is judicial duty to take immediate and proximate facts into evidence to reach a reasonable conclusion – The SECURITIES AND EXCHANGE BOARD OF INDIA

It is judicial duty to take immediate and proximate facts into evidence to reach a reasonable conclusion – The SECURITIES AND EXCHANGE BOARD OF INDIA

It is judicial duty to take immediate and proximate facts into evidence to reach a reasonable conclusion in a way an reasonable man would adopt to arrive one and applying the method the noticee was found to be indulged in not genuine trades and was the acts were found violative under section 15HA of the SEBI Act for the violation of regulation 3(a), (b), (c), (d), 4(1) and 4(2)(a) of PFUTP Regulations, 2003. the case was adjudicated by ANSUMAN DEV PRADHAN adjudicating officer in ADJUDICATION ORDER NO.: Order/AP/SS/2021-22/14720.

The facts of the case were that the Securities and Exchange Board of India (SEBI) conducted investigation into the trading activity in illiquid stock options on Bombay Stock Exchange Limited (BSE) for the period April 01, 2014, to September 30, 2015, observing large scale reversal of trades in the Stock Options segment of the BSE. Pursuant to investigation, it was observed that during the period, total of 2,91,744 trades comprising substantial 81.40% of all the trades executed in stock options segment of BSE were non genuine trades. The non genuine trades resulted into creation of artificial volume in stock options segment of BSE during the IP. It was observed that Ms. Radha Devi Banka (Noticee) was one of the various entities who indulged in execution of reversal trades in stock options segment of BSE during the IP. Such trades were observed to be non-genuine in nature and created false and misleading appearance of trading in terms of artificial volumes in stock options segment and therefore were 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 (PFUTP Regulations, 2003). SEBI appointed the undersigned as Adjudicating Officer under Section 15-I of the Securities and Exchange Board of India Act, 1992 (SEBI Act, 1992) read with Rule 3 of the SEBI (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995 (Adjudication Rules, 1995) to inquire against the noticee for the alleged violations of PFUTP Regulations, 2003

The adjudicating officer notices that the Noticee had executed reversal trades which were the non-genuine trades and the same led to the generation of artificial volume in stock options contracts at BSE and it is also noted that the matching of trades cannot be a mere coincidence and it shows that there is a clear meeting of minds because non-genuine trades cannot be conducted without meeting of minds at some level.

After taking all the facts and circumstances into notice the officer is of the view that the Noticee indulged in execution of reversal trades in stock options on BSE in the Investigation Period which were non-genuine and created false and misleading appearance of trading in terms of artificial volumes in stock options, leading to violation of regulation 3(a), (b), (c), (d), 4(1) and 4(2)(a) of PFUTP Regulations, 2003. And imposed a penalty of ₹5,00,000/- on the noticee

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Order reviewed by Naveen Sharma

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