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2012 (5) TMI 779
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....For the sake of convenience, the facts are being taken from Appeal no. 76 of 2012. 2. The appellant company is a stock broker having its registered office at Mumbai. It is said to be doing proprietary trading from 2 locations through 19 terminals in Mumbai. The terminals are operated by 'jobbers' authorized by the appellant. It traded in the scrip of Edserv Softsystems Ltd. (the company) on the first day of its listing on March 2, 2009 and for a few days thereafter. Since price of the scrip saw an upward movement, the Bombay Stock Exchange Ltd. and the National Stock Exchange of India Ltd. carried out investigations for the period from March 02 - 06, 2009 and March 02 - 09, 2009 respectively into the trading of the scrip. Subsequen....
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....5 106.60 21,30,360 6.25 106.60 0 1607 868 Total 1,13,80,948 33.37 1,13,80,948 33.37 0 The summary of the alleged fictitious trades, as executed by the appellant, is also given in the show cause notice as under: Member (Client) Date Buy Qty. Self Trades (No. of shares) Self Trades as a % of total buy by client Total traded Qty. in the scrip on the day Self Trades as a % of total traded qty in the scrip on the day HJSL (Own) March 02, 2009 28,33,872 2,00,725 7.08% 3,41,04,135 0.59% March 03, 2009 2,68,183 23,036 8.59% 42,19,116 0.55% March 06, 2009 1,38,362 1,215 0....
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....ere being entered through 19 different terminals. The explanation offered by the appellant was not accepted by the Board and the adjudicating officer, by the impugned order, held the appellant guilty of violating Regulation 3(a), (d) and 4(1), 4(2) (a) and (g) of the FUTP regulations and code of conduct for stock brokers as prescribed in Schedule II of the stock broker regulations and imposed a penalty of ` 3,50,000 under section 15 HA and 15 HB of the Securities and Exchange Board of India Act, 1992 (the Act). Under similar circumstances, the appellant in Appeal no. 81 of 2012 also traded in the same scrip adopting the same modus operandi and a consolidated penalty of ` 1,50,000 has been imposed upon it. Hence these appeals. 4. We....
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....ced orders in the scrip through his pro-account operating through jobbers through different terminals, the possibility of some of the trades getting matched is not ruled out and such percentage is only 0.59% of the total trades executed by the appellant which cannot be considered to be objectionable. There was no malafide intention on the part of the appellant in executing these trades and hence the appellant cannot be held guilty of violating the provisions of FUTP regulations or the code of conduct prescribed for the stock brokers. 5. On the other hand, learned counsel for the Board submitted that the facility given by the stock exchange of using own account through trading terminals from more than one location has been misused by the ....
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....are the same party. Such trades create artificial volume in the traded scrip and send wrong signal to the lay investor with regard to trading in the scrip. The Board has come to a definite finding that the appellant had executed self trades on the day of listing for 2,00,725 shares which was 7.08% of its total quantity i.e. one in every fourteen trades of the appellant's total buy quantity on that day was a self trade on its proprietary account in terms of volume. Similar is the situation on the sale side. It is further noted by the Board that trading pattern in the subsequent day also reflects that one out of eleven trades of the appellants' total buy quantity was a self trade on its proprietary account in terms of volume. This finding of ....