Market manipulation through synchronized and reverse trades upheld where relied-upon material was disclosed and no prejudice was shown.

Disclosure of the material actually relied upon satisfies natural justice; the Tribunal held that furnishing the relevant trade and order extracts and linkage chart was sufficient, and no prejudice was shown from non-supply of the full investigation record. Repeated synchronized, circular and reversal trades between interconnected parties over the trading period were treated as indicative of manipulation designed to create artificial volumes, so the finding of fraudulent and manipulative trading was upheld. The restraint order was therefore sustained and the regulatory action remained undisturbed.

---

---

Issues: (i) Whether non-supply of the complete investigation report and full trade and order logs vitiated the proceedings for breach of natural justice; (ii) Whether the trading pattern, including circular and synchronized/reversal trades, justified the finding of market manipulation and the restraint order.

Issue (i): Whether non-supply of the complete investigation report and full trade and order logs vitiated the proceedings for breach of natural justice.

Analysis: The relevant extract of the trade and order logs and the chart showing interconnection between the parties had been furnished with the show-cause notice. The material relied upon by the authority was confined to the appellant's trades and the disclosed linkage evidence. The record did not show that any other undisclosed material was used against the appellant. The Tribunal held that natural justice requires disclosure of relied-upon material, not every item gathered during investigation, and that the appellant had not shown prejudice.

Conclusion: The plea of violation of natural justice was rejected.

Issue (ii): Whether the trading pattern, including circular and synchronized/reversal trades, justified the finding of market manipulation and the restraint order.

Analysis: The Tribunal accepted that the transactions were not to be viewed in isolation because the parties were interconnected. The appellant's trading over 18 days, with reversal or circular trades on 12 days and large numbers of buy and sell orders resulting in repeated buy and sell trades, was supported by the disclosed trade logs. The Tribunal held that such repeated reverse trading was indicative of manipulation designed to create artificial volumes and that the omission in one illustrative part of the impugned order did not undermine the overall findings.

Conclusion: The finding of fraudulent and manipulative trading was upheld, and the restraint order was sustained.

Final Conclusion: The appeal failed on both the procedural and merits challenges, and the impugned regulatory action remained undisturbed.

Ratio Decidendi: Disclosure of the material actually relied upon satisfies natural justice, and repeated synchronized or reverse trades among connected parties may sustain a finding of market manipulation even where the transactions are executed through a stock exchange mechanism.

---