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The adjudication proceedings against the noticee abated and the show cause notice disposed of – THE SECURITY AND EXCHANGE BOARD OF INDIA

The adjudication proceedings against the noticee abated and the show cause notice disposed of – THE SECURITY AND EXCHANGE BOARD OF INDIA

The SEBI conducted an investigation into trading activity and found large scale reversal of trades in the stock options segment of the BSE and  Ms. Sulochana Devi Gadia (NOTICEE) was found for conducting reversal trades In the segment of the stock and was alleged to violating regulations 3(a), (b), (c), (d), 4(1) and 4(2) (a) of the Securities and Exchange Board of India Regulations, 2003. adjudication proceedings were conducted against the noticee by the appointed adjudication officer Mohamed Rahaz P. M in  (ADJUDICATION ORDER NO. Order/MR/VV/2021-22/14993)

The results of the investigation showed that out of the total trades executed on the BSE stock options segment, around 81% were reversal / non-genuine and these trades led to the creation of artificial trades and the creation of the false identity of shares. The adjudication proceedings were initiated against the noticee and a show-cause notice under rule 4(1) of the Adjudication Rules to show cause as to why an inquiry should not be held and penalty not be imposed against the Noticee under section 15HA of the SEBI Act for the alleged violation of regulations 3(a),(b),(c),(d), 4(1) and 4(2)(a) of the PFUTP Regulations.

The show-cause notice alleged that the noticee had indulged in reversal trades which allegedly created a false and misleading appearance of trading and noticee engaged in two (2) trades in one (1) unique contract and the trades were reversed with the same counterparty at a substantial price difference without any basis, which indicates that these trades were artificial and non-genuine.

The grandson of the noticee through an authorized representative responded to the SCN that the proceedings against the noticee should be closed because of the death of the noticee and relied on the case of Alamelu Veerappan Vs. Income Tax Officer wherein it was held that notice issued in the name of dead person is unenforceable in the eye of law and view of the decision of  Chandravadan J Dalai Vs. SEBI the proceedings should be abated in the present matter.

The officer considered the issues and pursued the charges leveled against the noticee and considering the facts and procedure of the case and the submitted death certificate submitted by the noticee representative and before deciding on the merit of the case finds that whether because of the demise of the Noticee, the present adjudication proceedings against the Noticee can be continued. The officer relied on the case of  Girija Nandini Vs Bijendra Narain and the case of Chandravadan J Dalal vs. SEBI and finds that that the cases in which the noticee dies during the pendency of the appeal and the appeal abates in the appeal.

From the facts and documents submitted the officer passed the order that the instant adjudication proceedings against the Noticee are liable to be abated without going into the merits of the case. The officer disposed of the SCN issued against the noticee accordingly and under rule 6 of the Adjudication Rules, 1995 the copy of the order is sent to the noticee.

Click here to read the Order

Order reviewed by Naveen Sharma

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