Notice of Disciplinary Action against HAP Trading, LLC,
Member Organization, Saagar Kamal Gupta, former
proprietary trader and associated person of HAP Trading, LLC,and Harsh A. Padia, Chief Executive Officer and Managing
Member of HAP Trading, LLC
To:

Members, Member Organizations, Participants and Participant Organizations

From:

John C. Pickford, Assistant General Counsel, NASDAQ OMX PHLXSMDATE:May 12, 2013

Enforcement No. 2014-03
FINRA No. 20100233913
On April 3, 2014, the Business Conduct Committee (the “Committee”) issued a disciplinary
decision against HAP Trading, LLC (“HAP Trading”), a member organization of theExchange, Saagar Kamal Gupta (“Gupta”), a former proprietary trader and associatedperson of HAP Trading, LLC, and Harsh A. Padia (“Padia”), HAP Trading’s Chief Executive
Officer and Managing Member. The decision was subsequently served upon respondents,
through counsel, on May 12, 2014, in coordination with the issuance of similar decisions
by the Chicago Board Options Exchange (“CBOE”), NYSE MKT LLC (“NYSE MKT”), andNYSE Arca, Inc. (“NYSE Arca”). In response to a Statement of Charges issued in thisaction, HAP Trading, Gupta, and Padia submitted Offers of Settlement, Stipulation of Facts
and Consent to Sanctions (“Offers”). Solely to settle this proceeding, and withoutadmitting or denying the charges, HAP Trading and Gupta consented to findings thatduring the period beginning on or about June 1, 2010 and continuing until on or about
July 31, 2010, they violated Exchange Rules 707 and 782, in that HAP Trading, by andthrough Gupta, on multiple occasions and on multiple trade dates, engaged in crossproduct manipulation whereby they effected purchases or sales of equity securities in HAP
Trading’s proprietary account to create a false, misleading, or artificial appearance in theprice of the securities and options overlying those securities. These transactions triggered
activity and price movement in the equity securities, which in turn impacted the price ofthe overlying equity options and enabled the Firm and Gupta to purchase or sell theoverlying equity options at more favorable prices. HAP Trading and Gupta thereby
obtained unlawful financial benefits of at least $1,250,000.
Additionally, HAP Trading and Padia consented to findings that they violated Exchange
Rules 707 and 748 by failing to adequately supervise the trading activity of Gupta toensure compliance with Exchange Rule 782, in connection with the conduct describedabove.
The Committee found that HAP Trading and Gupta violated Exchange Rules 707 and 782,
and that HAP Trading and Padia violated Exchange Rules 707 and 748. The Committee
concurred in the sanctions consented to by them, and ordered the imposition of thefollowing sanctions: (i) a censure of each Respondent; (ii) a total fine of $520,000,
payable by HAP Trading, for violations of Exchange Rules 707 and 782, consisting ofdisgorgement of $475,000 1 and a fine of $45,000; 2 (iii) a fine of $75,000, 3 payable by
Gupta, for violations of Exchange Rules 707 and 782; (iv) a fine of $30,000, 4 payable by
HAP Trading and Padia jointly and severally, for violations of Exchange Rules 707 and748; and (v) a three-month suspension of Gupta in all capacities from association withany member organization of the Exchange.
For more information, contact:•John C. Pickford, Assistant General Counsel, NASDAQ OMX PHLX, at +1 215 496 5273

 Copyright 2009 The NASDAQ OMX Group, Inc. All Rights Reserved.

1

The total disgorgement amount assessed against HAP Trading pursuant to its settlementagreements with Chicago Board Options Exchange, NYSE MKT LLC, NYSE Arca, Inc., andNASDAQ OMX PHLX, LLC is $1,250,000.
2

The total fine against HAP Trading for the trading violations pursuant to its settlementagreements with Chicago Board Options Exchange, NYSE MKT LLC, NYSE Arca, Inc., andNASDAQ OMX PHLX, LLC is $150,000.
3

The total fine against Gupta for the trading violations pursuant to his settlementagreements with Chicago Board Options Exchange, NYSE MKT LLC, NYSE Arca, Inc., andNASDAQ OMX PHLX, LLC is $250,000.
4

The total fine against HAP Trading and Padia for the supervision violations pursuant totheir settlement agreements with Chicago Board Options Exchange, NYSE MKT LLC, NYSEArca, Inc., and NASDAQ OMX PHLX, LLC is $100,000.
2