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of <h1>SEBI penalties quashed due to delay; res judicata applied; manipulative trades upheld</h1> <h3>Sanjay Jethalal Soni Versus Securities and Exchange Board of Indaia</h3> Sanjay Jethalal Soni Versus Securities and Exchange Board of Indaia - TMI Issues:1. Appellants challenging penalty imposed by SEBI for violation of SEBI Act and PFUTP Regulations.2. Principle of res judicata and delay in initiating proceedings.3. Allegations of self trades and match trades being manipulative and fraudulent.4. Arguments regarding applicability of res judicata and delay by both parties.Issue 1: Appellants challenging penalty imposed by SEBI for violation of SEBI Act and PFUTP Regulations:The appellants filed an appeal against the penalty imposed by the Adjudicating Officer of SEBI for violating Section 12(A)(a),(b) and (c) of the SEBI Act and Regulations 3(a),(b),(c),(d),4(1), 4(2)(a) and (g) of PFUTP Regulations. The penalty was imposed under Section 15HA of the SEBI Act due to the appellants' involvement in match trades and self trades in a manipulative manner, which SEBI found to be fraudulent and unfair practices.Issue 2: Principle of res judicata and delay in initiating proceedings:The appellants argued that the principle of res judicata should apply as the second show cause notice issued by SEBI was for the same violation previously investigated. They contended that there was an inordinate delay of seven years in initiating the proceedings, which should lead to dismissal based on laches. The Tribunal agreed, citing previous cases and held that the delay was unjustified, leading to the quashing of the penalty order.Issue 3: Allegations of self trades and match trades being manipulative and fraudulent:SEBI found that the appellants engaged in self trades and match trades in a manipulative and fraudulent manner, violating Regulations 3 and 4 of the PFUTP Regulations. The appellants disputed these findings, arguing that the AO's conclusions were erroneous and did not prove manipulative practices. However, SEBI maintained that the evidence supported the findings.Issue 4: Arguments regarding applicability of res judicata and delay by both parties:The respondents argued that the principle of res judicata did not apply as the noticees in the first and second show cause notices were different. They also contended that there was no inordinate delay in initiating the proceedings, as they acted promptly upon noticing the violations. The Tribunal, however, found the delay unjustified and emphasized the need for timely action by regulatory authorities.In conclusion, the Tribunal quashed the show cause notice and the penalty order due to the inordinate delay in initiating the proceedings. The appeals were allowed, and no costs were imposed.
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