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CS Executive · Capital Market and Securities Laws · Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market

An adjudicating officer finds that a promoter made profits of Rs 12 crore through fraudulent and unfair trade practices. Applying Section 15HA of the SEBI Act, 1992, what is the maximum penalty that may be imposed?

The maximum penalty is Rs 36 crore. Section 15HA allows a penalty up to twenty-five crore rupees or three times the profits made, whichever is higher. Three times Rs 12 crore equals Rs 36 crore, which is higher than Rs 25 crore, so that becomes the ceiling.

  1. ARs 25 crore
  2. BRs 12 crore
  3. CRs 36 croreCorrect
  4. DRs 37 crore

Explanation

The ceiling is the higher of Rs 25 crore or three times the profits. Three times Rs 12 crore is Rs 36 crore, which exceeds Rs 25 crore, so Rs 36 crore is the maximum. Rs 25 crore wrongly treats the fixed amount as the cap regardless of profits.

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