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A show-cause notice was issued against the noticee under rule 4(1) of SEBI rules, 1995 – The Securities and Exchange Board of India

A show-cause notice was issued against the noticee under rule 4(1) of SEBI rules, 1995 – The Securities and Exchange Board of India

The security and exchange board of India initiated adjudication proceedings against Rais Uddin (Noticee) for alleged violation of regulations of 3(a), (b),(c),(d) and 4(1),(2) an of  PFUTP regulation,2003  in the matter of trading in illiquid trading options. the adjudication proceedings were initiated against the noticee for the alleged violations and a show-cause notice was presented to noticee by the appointed adjudication officer BARNALI MUKHERJEE.

SEBI observed large scale reversal of trades In stock options of BSE and during the investigation, it was found that the reversal trades comprised of 81.40 of total trades were squared off with a price difference without any basis for such price change and it is alleged that the trades were non-genuine and resulted into creation of artificial volumes and the noticee was alleged to have been involved in the creation of 5 reversal trades and further investigation showed that the alleged noticee trades has significantly contributed in the creation of reversal trades and the noticee executed 5 trades which constitutes of 68.06 % of the total market in the contract.

From the investigation proceeding the noticee was alleged to be indulged in the execution of non-genuine reversal of trades in stock options and creating a false and misleading appearance of trading in stock options and thereby allegedly violated regulations 3(a),(b),(c),(d) and 4(1),(2) an of PFUTP regulation,2003 and, if notice found liable for the alleged  violations and  the monetary penalty under section 15 a of the SEBI  act, 1992, will be imposed.

Hence a  show-cause notice was called upon as to why an inquiry should not be held against the noticee as per the terms of rule 4 of the adjudication rules, 1995 read with section 15-I of the SEBI act,  1992 and why penalty should not be imposed under section 15-HA of the Sebi act 1992.

Click here to read the Judgment

Order reviewed by Naveen Sharma

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