SEBI's order in the matter of Illiquid stock options at BSE

WTM/AB/IVD/ID-8/06/2020-21
SECURITIES AND EXCHANGE BOARD OF INDIA

ORDER

Under Section 15I (3) read with Section 19 of the Securities and Exchange Board of India, 1992 - In respect of Adjudication order dated February 26, 2020 passed against Shri Ashok Kumar Damani (PAN: ACXPD6089R) in the matter of Illiquid
Stock Options at BSE.

1. Present proceedings have emanated from a show cause notice dated April 09, 2020 (hereinafter referred to as “SCN”) issued by Securities and Exchange Board of India (hereinafter referred to as “SEBI”) under Section 15-I(3) of Securities and Exchange Board of India Act, 1992 (hereinafter referred to as “SEBI Act, 1992”) to Shri Ashok Kumar Damani (hereinafter referred to as “the Noticee”) calling upon him to show cause as to why the quantum of penalty imposed in terms of Section 15HA of the SEBI Act, 1992, should not be enhanced.

2. Prior to the SCN, an Adjudication Order dated February 26, 2020 (hereinafter referred to as “AO Order”) under Section 15-I of the SEBI Act, 1992 read with Rule 5 of the SEBI (Procedure for Holding Inquiry and Imposing Penalty by Adjudicating Officer) Rules, 1995, was passed by the adjudicating officer against the Noticee, wherein the Noticee was found to be engaged in synchronized trading in the illiquid stock options at BSE in violation of Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a) of the SEBI (Prohibition of
Fraudulent and Unfair Trading Practices related to Securities Markets) Regulations, 2003 (hereinafter be referred to as, the “PFUTP Regulations, 2003”) and therefore, a penalty of Rs. 3,00,000/- (Rupees Three Lakh Only) was imposed upon the Noticee under Section 15HA of the SEBI Act, 1992. Order under Section 15I(3) of SEBI Act, 1992 in respect of Shri Ashok K Damani

3. SEBI after examining the records of the adjudication proceedings, was of the opinion that the AO Order is erroneous and is not in the interest of the securities market, as the penalty imposed is less than the minimum penalty of Rs. 5,00,000/- provided under Section 15HA of the SEBI Act, 1992 vide the Securities Laws (Amendment) Act, 2014, for such violations. Accordingly, the
SCN, as mentioned in para 1 above, has been issued to the Noticee under Section 15I(3) of the SEBI Act, 1992.

Reply and Hearing:

4. The Noticee, vide his email dated April 20, 2020, filed reply to the SCN and requested for an opportunity of personal hearing. An opportunity of personal hearing was granted to the Noticee on June 01, 2020. The Noticee vide his email dated May 19, 2020, requested that the hearing scheduled for June 01, 2020 be adjourned due to the continued lockdown. Following the principles of
natural justice, another opportunity of personal hearing was granted to the Noticee on August 07, 2020. On August 07, 2020, the Noticee availed the personal hearing via video conferencing and made submissions. 

To know more in details, find the enclosed file