Tribunal quashes market access restrictions & penalties, emphasizes need for evidence of collusion

The tribunal ruled in favor of the appellant in appeals against SEBI orders, quashing market access restrictions and penalties for violating regulations. Lack of evidence of collusion between buyer and seller led to the charges being dismissed. The tribunal emphasized the need for a causal connection and collusion to prove manipulation in securities prices, citing past judgments. The appeals were allowed without costs, highlighting the importance of proving collusion for allegations of artificially raising prices under PFUTP Regulations.

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Issues:
1. Appeal against SEBI order restraining access to securities market and imposing penalties.
2. Allegation of manipulation in the price of securities.
3. Lack of causal connection and collusion between buyer and seller.
4. Interpretation of trading patterns and regulations under PFUTP Regulations.
5. Comparison with previous judgments regarding collusion between buyer and seller.

Issue 1: Appeal against SEBI order and penalties
The appellant filed two appeals against SEBI orders: Appeal No. 97 of 2019 challenging a two-year market access restriction and Appeal No. 544 of 2019 contesting a Rs. 2 lakh penalty for violating PFUTP Regulations. Both appeals were related to the same violation, thus decided together.

Issue 2: Alleged manipulation in securities price
The appellant was accused of contributing to the positive Last Traded Price (LTP) as a seller, leading to a misleading appearance of trading in a specific company's scrips. The WTM found the appellant's trading pattern manipulative, violating PFUTP Regulations.

Issue 3: Lack of causal connection and collusion
The tribunal noted the absence of evidence establishing a connection between the buyer and the seller, as well as no link between the appellant and the company's promoters/directors. Without causal connection or collusion, the charges could not be sustained.

Issue 4: Interpretation of trading patterns and regulations
The tribunal analyzed the trading activities, emphasizing that selling miniscule shares alone is not illegal unless collusion is proven. The appellant's actions did not indicate fraudulent or unfair trade practices, and the charge of contributing to LTP required collusion, which was not evident.

Issue 5: Comparison with previous judgments
The tribunal referenced past judgments emphasizing the necessity of collusion between buyer and seller to establish artificial price raising. Without such collusion, charges related to manipulating prices could not be upheld. The tribunal quashed the impugned orders and allowed the appeals, citing the absence of evidence of collusion.

In conclusion, the tribunal found in favor of the appellant, highlighting the lack of evidence of collusion between the buyer and seller, essential to proving manipulation in securities prices. The tribunal emphasized the importance of establishing a causal connection and collusion to sustain charges related to contributing to the LTP. The past judgments reiterated the requirement of collusion for allegations of artificially raising prices. As a result, the impugned orders were quashed, and the appeals were allowed with no costs imposed.

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