TaxTMI 
TaxTMI 
2013 (12) TMI 459
X X X X Extracts X X X X
X X X X Extracts X X X X
....Practices relating to Securities Market) Regulations, 2003 ('PFUTP Regulations' for short) and Rs. 5 lac for violation of clauses A(1), A(2), A(3), A(4) and A(5) of the Code of Conduct specified in Schedule II under Regulation 7 of SEBI (Stock-Brokers and Sub-Brokers) Regulations, 1992 ('Broker Regulations' for short) has been imposed against appellant. 2. Appellant is a private limited company incorporated under the provisions of Companies Act, 1956 and is primarily engaged in the business of stock broking and investment. 3. On noticing that in the scrip of Adani Exports Ltd. there were huge spurt in volumes and wide fluctuations in price during the period from July 9, 2004 to January 14, 2005 ('first period' for short) and August 8,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tted that trading in large volumes in a scrip or huge fluctuation in volume or price in a scrip does not by itself lead to any violation. Similarly, while carrying out jobbing transactions if by coincidence some trades match, it cannot be inferred that all those trades were manipulated. By relying on decision of this Tribunal in case of KSL & Industries Ltd. v. SEBI in Appeal no. 9 of 2003 decided on September 30, 2003, counsel for appellant submitted that in the absence of any evidence on record to show that trades in question were executed with ulterior motives, penalty should not be imposed solely on the ground that most of the trades were found to be synchronized. 8. Mr. Seksaria, learned counsel appearing on behalf of respondent, on....
X X X X Extracts X X X X
X X X X Extracts X X X X
....which could be inferred from attending circumstances such as nature of transaction executed, frequency with which such transactions are undertaken, value of the transactions, whether there is real change of beneficial ownership, conditions then prevailing in the market etc. Reliance is also placed on decision of Bombay High Court in SEBI v. Cabot International Capital Corpn. [2004] 51 SCL 307 decision of this Tribunal in Appeal no. 171 of 2011 (Sparkline Mercantile Co. Pvt. Ltd. vs. SEBI) decided on January 16, 2012 and Appeal no. 162 of 2012 (Shraddha Stock Broking Pvt.Ltd. vs. SEBI) decided on December 3, 2012 in support of contention that mens rea is not essential element for imposing penalty under SEBI Act and once appellant is found to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ting market equilibrium. 14. Mere fact that buy and sell orders between appellant and one group (with whom no connection is attributed) within a time gap of one minute with negligible or no price difference cannot ipso facto lead to conclusion that the trades in question were executed with a view to manipulate the scrip. In absence of any circumstantial evidence to suggest that synchronized trades were executed for purpose of upsetting market equilibrium or to manipulate market, it cannot be inferred that appellant was guilty of violating PFUTP Regulations or Broker Regulations. 15. Fact that appellant had stated that while carrying out jobbing transactions some transactions carried out by appellant could have been matching, it cannot....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ld appellant is guilty of violating PFUTP Regulations/Broker Regulations merely because most trades between appellant and counterparty were found to be synchronized. 17. Reliance placed by counsel for respondent on decision of this Tribunal in case of Ketan Parekh (supra) is misplaced. In that case evidence on record clearly demonstrated that appellant therein had indulged in circular trading and therefore he was held guilty. In this case there is no evidence on record to show that synchronized trades were executed with a view to create artificial volume in the scrip and thereby disturb market equilibrium. Therefore, decision of this Tribunal in Ketan Parekh's case (supra) has no relevance to present case. Similarly decision of this Trib....