Question

Under Section 15G of the SEBI Act, 1992, Mr. Z, a director of listed company ABC Limited, possesses non-public information that ABC's major customer contract will be terminated, causing significant revenue loss (expected stock decline: 30%). On Day 1, before the announcement, Z sells his 1,00,000 shares at ₹1,000 per share (₹10 crores). On Day 5, after public announcement, the stock price crashes to ₹700 per share. Z avoided loss of ₹30 crores (₹300 per share × 1,00,000 shares). SEBI imposes insider trading penalty under Section 15G. Which of the following correctly applies the penalty provision?

A Z can be penalized only up to ₹1 crore (maximum limit) because this is a civil penalty, not criminal; the "gain or profit" calculation is capped at ₹1 crore
B Z can be penalized with fine up to ₹90 crores because Section 15G permits penalties amounting to three times the gain or profit that accrued or would have accrued to the accused; here, Z avoided loss of ₹30 crores (₹90 crores = 3 × ₹30 crores), or imprisonment up to 15 years and such fine, whichever is higher
C Z's penalty is limited to the actual loss suffered by other investors; SEBI must first calculate aggregated losses to retail investors and then fix Z's penalty proportionally
D Z's penalty is limited to ₹25 crores because Section 15G expressly caps penalties at ₹25 crores regardless of gain or profit calculation
E Z is entitled to leniency because he avoided losses rather than making profits; Section 15G applies only to actual gains, not loss avoidance
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