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

Ravi Traders Ltd.'s promoter is found guilty of a fraudulent practice in securities and made profits of Rs 10 crore from it. Under Section 15HA, what is the maximum penalty that may extend?

The maximum penalty is Rs 30 crore. Section 15HA allows a penalty up to twenty-five crore rupees or three times the profits, whichever is higher. Three times the Rs 10 crore profit is Rs 30 crore, which is higher than Rs 25 crore.

  1. ARs 10 crore, being the profit made
  2. BRs 25 crore, being the fixed amount, since it exceeds three times the profit
  3. CRs 30 crore, being three times the profit, since it exceeds Rs 25 croreCorrect
  4. DRs 55 crore, being the fixed amount plus three times the profit

Explanation

The ceiling is the higher of Rs 25 crore or three times the profits. Three times Rs 10 crore is Rs 30 crore, which exceeds Rs 25 crore, so Rs 30 crore is the maximum. Choosing Rs 25 crore ignores the 'whichever is higher' wording, and adding the two figures is not what the section provides.

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