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

Ravi is found to have engaged in fraudulent trade practices in the shares of a listed company, and his profits from the practice were Rs 4 crore. Applying Section 15HA, what is the maximum penalty that can be imposed on him?

The maximum penalty is Rs 25 crore. Section 15HA allows up to twenty-five crore rupees or three times the profits, whichever is higher. Three times Rs 4 crore is only Rs 12 crore, so the fixed Rs 25 crore ceiling is the higher figure and governs.

  1. ARs 4 crore, being the profit made
  2. BRs 12 crore, being three times the profit
  3. CRs 25 crore, being the fixed ceiling, since it exceeds three times the profitCorrect
  4. DRs 29 crore, being the fixed ceiling plus the profit

Explanation

The maximum is Rs 25 crore or three times the profits, whichever is higher. Three times Rs 4 crore is Rs 12 crore, which is less than Rs 25 crore, so the ceiling is Rs 25 crore. Choosing Rs 12 crore ignores the 'whichever is higher' wording.

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