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

Meera, a trader, made profits of Rs 3 crore from a manipulative trading pattern found to be a fraudulent and unfair trade practice. Under Section 15HA of the SEBI Act, 1992, what is the maximum penalty she can face?

The maximum penalty is Rs 25 crore. Section 15HA sets the upper limit at twenty-five crore rupees or three times the profits, whichever is higher. Three times Rs 3 crore is only Rs 9 crore, so the Rs 25 crore figure is higher and governs.

  1. ARs 9 crore, as three times the profits
  2. BRs 3 crore, equal to profits
  3. CRs 25 crore, as it is higher than three times the profitsCorrect
  4. DRs 28 crore, being Rs 25 crore plus profits

Explanation

Three times Rs 3 crore is Rs 9 crore. The Act fixes the ceiling at the higher of Rs 25 crore or three times the profits, so Rs 25 crore applies. Choosing Rs 9 crore wrongly ignores the Rs 25 crore alternative.

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