Adjudication proceedings against noticee abated because noticee expired before the issuance of show cause notice – The Securities and exchange board of India 

BEFORE THE ADJUDICATING OFFICER SECURITIES AND EXCHANGE BOARD OF INDIA ADJUDICATION ORDER NO.: Order RD AP 2021 22 14751] UNDER SECTION 15 I OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT 1992 READ WITH RULE 5 OF THE SECURITIES AND EXCHANGE BOARD OF INDIARULES In respect of: Mahesh Kumar Agarwala PAN: AADHM3430K In the matter of dealings in Illiquid Stock Options at the Bombay Stock Exchange 1. Securities and Exchange Board of India observed large scale reversal of trades in the Stock Options segment of the Bombay Stock Exchangeleading to the alleged creation of artificial volume in the stock options segment. In this regard SEBI conducted an investigation into the trading activity in the illiquid Stock Options segment at the BSE for the period April 01 2014 to September 30 2015 hereinafter referred to as “Investigation Period”). 2. It was observed during the course of investigation that a total of 2 91 643 trades comprising 81.38% of all the trades executed in the Stock Options Segment at BSE during the investigation period were trades which involved reversal of buy and sell positions by the clients and counterparties in a contract on the same day. It was observed that Mr. Mahesh Kumar Agarwalawas one such client whose reversal trade(s) involved squaring off open positions with a significant difference without any basis for such change in the contract price. The aforesaid reversal trade(s) allegedly resulted into generation of artificial volumes leading to allegations that the Noticee had violated the provisions of Regulations 3(a) (c) and Regulations 4(1) 4(2)(a) of the SEBIRegulations 2003read with rule 3 of the SEBI Procedure for Holding Inquiry and Imposing Penalties) Rules 1995vide order dated July 06 2021 to inquire into and adjudge under section 15HA of the SEBI Act against the Noticee for the alleged violation of the aforesaid provisions of PFUTP Regulations 2003. SHOW CAUSE NOTICE REPLY AND HEARING 4. A SEBI WRO WRO WRO P OW 2021 0000040167 1 dated December 30 2021 hereinafter referred to as “SCN”) was issued to the Noticee under Rule 4(1) of the Adjudication Rules to show cause as to why an inquiry should not be initiated against the Noticee and why penalty should not be imposed upon the Noticee under Section 15HA of the SEBI Act for the violations alleged to have been committed by the Noticee. 5. The undersigned was informed vide email dated January 08 2022 that the Noticee had passed away on April 28 2021. A copy of the death certificate dated May 23 2021 issued by Registrar Kolkata Municipal Corporation Kolkata was produced along with the said email. It is observed that the Noticee expired before initiation of the present Adjudication Proceedings against him. 6. In this regard it is relevant to note that section 15 Iof the Securities and Exchange Board of India Act 1992 states as under: Adjudication Order in respect of Mahesh Kumar Agarwala in the matter of dealings in Illiquid Stock Options at BSE “For the purpose of adjudging under sections 15A 15B 15C 15D 15E 15EA 15EB 15F 15G 15H 15HA and 15HB the Board may appoint any officer not below the rank of a Division Chief to be an adjudicating officer for holding an inquiry in the prescribed manner after giving any person concerned a reasonable opportunity of being heard for the purpose of imposing any penalty” 7. In the matter under consideration the Noticee expired before the issuance of SCN and therefore an opportunity of personal hearing cannot be provided to the person concerned. Since the Noticee is non est and opportunity of being heard could not be provided for the purpose of imposing penalty I am of the view that the adjudication proceedings initiated against the Noticee do not survive and are liable to be abated without going into the merits of the case. Consequently no penalty is imposed on the Noticee who is deceased and the Adjudication Proceedings against the Noticee stands abated. 8. After taking into consideration all the facts and circumstances of the case the Adjudication Proceedings initiated against the Noticee viz. Late Mr. Mahesh Kumar Agarwalavide SCN bearing reference no. SEBI WRO WRO WRO P OW 2021 0000040167 1 dated December 30 2021 are disposed of. 9. In terms of Rule 6 of the Adjudication Rules a copy of this order is sent to the Noticee his legal representative and also to SEBI. Date: January 21 2022 Place: Raipur ROHIT DUBEY ADJUDICATING OFFICER Adjudication Order in respect of Mahesh Kumar Agarwala in the matter of dealings in Illiquid Stock Options at BSE 

Summary: Adjudication proceedings against noticee abated because noticee expired before the issuance of show cause notice – The Securities and exchange board of India  SEBI observed large scale reversal of trades in the Stock Options segment of the Bombay Stock Exchange leading to the alleged creation of artificial volume in the stock options segment and the noticee Mr. Mahesh Kumar Agarwala found suspicious for these reversal trades and allegation of violating  the provisions of Regulations 3(a), (b), (c), (d) and Regulations 4(1),4(2)(a) of the SEBI “PFUTP Regulations, 2003 and SEBI initiated adjudication proceedings and appointed ROHIT DUBEY ADJUDICATING OFFICER in [ADJUDICATION ORDER NO.: Order/RD/AP/2021-22/14751]   A show-cause notice was sent to the Noticee under Rule 4(1) of the Adjudication Rules to show why an inquiry should not be conducted and why penalty should not be imposed upon the noticee under Section 15HA of the SEBI Act for the violations alleged to have been committed by the Noticee. A letter came in response where   It was observed that the Noticee had expired before initiation of the present Adjudication Proceedings against him. Taking this matter into consideration it was observed that the Noticee expired before the issuance of SCN and hence, an opportunity of personal hearing cannot be provided to the noticee Since the Noticee is non-est and the opportunity of being heard could not be provided to impose penalty the officer is of the view that the adjudication proceedings initiated against the Noticee do hold enough ground and are abated without going into the merits of the case. With this, no penalty is imposed on the Noticee who is deceased and the Adjudication Proceedings against the Noticee stands abated.