Synchronized trades are not per se illegal; penalty needs evidence of collusion, manipulation, or false volume creation.

Synchronized trades are not per se illegal under the PFUTP and Broker Regulations; liability arises only where the trades are shown to be dubious, collusive, intended to manipulate the market, avoid detection, or create false volumes without real change in beneficial ownership. On the facts recorded, the order relied only on synchronized trades and did not identify counterparties, their connection with the appellant, or any direct or circumstantial material proving collusion or market manipulation. Mere matching of buy and sell orders within a short time gap at similar prices was insufficient. The penalty therefore could not be sustained and the impugned order was quashed.

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Issues: Whether penalty for alleged violations of the PFUTP Regulations and Broker Regulations could be sustained merely on the basis that the appellant's trades were synchronized, without material showing connection with the counterparty or an intent to create artificial volumes and disturb market equilibrium.

Analysis: Synchronized trades are not per se illegal. Liability arises only when such trades are shown to be dubious in nature, intended to manipulate the market, executed to avoid regulatory detection, lacking real change in beneficial ownership, or used to create false volumes affecting market equilibrium. Here, the impugned order recorded only that the appellant's trades with one group were synchronized. It did not set out the names of the counterparties, their connection with the appellant, or any other direct or circumstantial material to show collusion, market manipulation, or a design to create artificial volumes. Mere matching of buy and sell orders within a short time gap and at similar prices was insufficient to draw an inference of wrongdoing in the absence of supporting evidence.

Conclusion: The penalty could not be sustained, and the impugned order was liable to be quashed.

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