2012 (12) TMI 1144

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....d of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (FUTP Regulations) and imposing a monetary penalty of Rs. 18 lacs under Section 15HA of the Securities and Exchange Board of India Act, 1992 (the Act). The facts giving arise to this appeal, in brief, are as under: The appellant is a stock broker registered with the Board and the Calcutta Stock Exchange. It entered into certain proprietary trades through other brokers in the scrip of Bhansali Engineering Polymers Limited (the Company) during the period May 20, 2003 to August 20, 2003. 3. The Board carried out investigations into buying, selling and dealings in the scrip of the company for the period from May 12, 2003 to....

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....lation 4(2) (b) of the FUTP Regulations. 4. A show cause notice dated August 12, 2012 was issued to the appellant to show cause as to why enquiry be not held against the appellant and penalty imposed in accordance with the laid down procedure. The appellant replied to the show cause notice after which a personal hearing was granted. The appellant also filed its written submissions denying the charges. After consideration of the material on record, the adjudicating officer passed the impugned order holding the appellant guilty of violating regulation 4(2) (b) of the FUTP Regulations and imposed a penalty of `18 lacs under Section 15HA of the Act. Hence this appeal. 5. We have heard Shri Vinay Chauhan, learned counsel for the appellant ....

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.... However, we are of the view that the transactions where the appellant had financial arrangement with the counter party clients and had taken loans for trading heavily in the scrip resulting in price rise without any other fundamental being on record, cannot be said to be genuine transactions. Therefore, we cannot find any fault with the findings of the adjudicating officer that the appellant, while trading heavily in the scrip with connected parties with the loan provided by them and with insufficient net position, has breached the provisions of regulations 4(2) (b) of the FUTP Regulations. 7. It was also argued by the leaned counsel for the appellant that the Board has initiated action against the appellant but no action has been initi....