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Issues: (i) Whether the allegations against Himanshu Gupta regarding advance sharing of stock recommendations, non-public information, profit sharing, and violation of the securities law provisions were proved; (ii) Whether Partha Sarathi Dhar, SAAR Commodities Private Limited, Manan Sharecom Private Limited and Kanhya Trading Company engaged in fraudulent and unfair trade practices by trading on advance information of guest expert recommendations and were liable to debarment and penalty.
Issue (i): Whether the allegations against Himanshu Gupta regarding advance sharing of stock recommendations, non-public information, profit sharing, and violation of the securities law provisions were proved.
Analysis: The document inspection objection was rejected because the relied-upon material and documents relevant to the noticee had been supplied and the withheld material pertained to third parties or was otherwise not shown to have caused prejudice. On the merits, the material relied upon against Himanshu Gupta was held to be largely circumstantial and insufficient. The timing of communications did not establish a reliable flow of advance recommendation information from him to the profit makers, the trades in the relevant scrips did not match the alleged communication dates, and no direct evidence of profit sharing or receipt of kickbacks was produced. The alleged advance recommendation in relation to PNB 42 CE was also not supported by proof of communication to the relevant entities.
Conclusion: The allegations against Himanshu Gupta were not proved, and no direction or penalty was warranted against him.
Issue (ii): Whether Partha Sarathi Dhar, SAAR Commodities Private Limited, Manan Sharecom Private Limited and Kanhya Trading Company engaged in fraudulent and unfair trade practices by trading on advance information of guest expert recommendations and were liable to debarment and penalty.
Analysis: The order held that advance sharing of recommendations before public broadcast constituted non-public information in the context of market abuse, and that the evidence established a coordinated scheme involving advance information, trades placed before broadcast, price and volume impact after broadcast, and unlawful gains. Applying the inclusive definition of fraud and the preponderance-of-probabilities standard, the conduct was found to fall within the prohibition against fraudulent and unfair trade practices and within the provisions governing market manipulation and inducement. While the disgorged amount had already been dealt with in settlement proceedings, the remaining noticees were still liable to debarment and monetary penalty in view of the proved violations, though mitigation was considered in quantifying the penalties.
Conclusion: The violations were proved against these noticees, they were debarred from the securities market for two years, and monetary penalties were imposed.
Final Conclusion: The proceedings ended with complete exoneration of Himanshu Gupta, while the other concerned noticees were found liable for fraudulent and unfair trade practices and subjected to market restraint and penalties.
Ratio Decidendi: Advance sharing of stock recommendations before public broadcast, when used to trade ahead of the market and generate profits from the resulting price movement, constitutes non-public information and fraudulent and unfair trade practice under securities law, to be assessed on preponderance of probabilities.
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