TaxTMI 
TaxTMI 
2020 (8) TMI 843
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.... Securities and Exchange Board of India (hereinafter referred to as 'SEBI') dated 28th February, 2020. By the said order a penalty of Rs. 5 lakhs each has been imposed on the Appellants for violation of Regulations 3(a), (b), (c) and (d), 4(1), 4(2)(a) and (e) of Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (hereinafter referred to as 'PFUTP Regulations, 2003') by the Appellants, among others. Since the order impugned in both the appeals is the same and the basic facts relating to the appeals are also similar, we have heard these appeals together and are disposed of by this common decision. 2. The basic facts relating to the appeals are as fo....
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....f trades and raising of LTP etc. are as follows. (a) Details of trades by Bharti Goyal All Trades Trades with LTP>0 Trades with LTP>0 and buy orders placed first No.of trades No.of shares LTP Cont. (in Rs.) % to Mkt LTP No.of trades No.of shares LTP Cont. (in Rs.) No.of trades No.of shares LTP Cont. (in Rs.) % to Mkt LTP 9 284 28.65 8.13% 4 34 28.65 4 34 28.65 8.13% From the above table, it was observed that Bharti Goyal purchased 284 shares through 9 trades and her buy trades contributed Rs. 28.65 to the LTP in the scrip during investigation period. It was also observed that out of 9 trades, 4 trades contributed to positive LTP and all in such 4 trades,buy ord....
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....of Mapro based on market rumours; bought the shares through ICICI Direct online trading platform and does not have any idea of LTP etc. Ms. Bharti Goyal, appearing in person contends that she invested in the shares of Mapro in the normal course of business as she is a small-time trader though not frequent. Both the Appellants also contended that they have no connection or relationship with any connected/suspected entity and finally lost money in this investment. On a specific query from the Bench as to why they were placing buy orders at prices higher than the LTP, the learned counsel for the Appellant L.K. Vyas submitted that Mapro was found to be a good investment and since people were not selling the shares they were placing buy orders a....
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....while adopting the arguments put forth by Shri Kumar Desai, further emphasized how trading dynamics alone is sufficient to establish PFUTP violations and how deceptive the nature of trading adopted by the Appellants are. Further, in addition to Ajmera (supra), he also relied on the judgment of the Hon'ble Supreme Court in SEBI vs. Rakhi Trading (CA No. 1969/2011, order dated February 8, 2018). 8. The relevant provisions of the PFUTP Regulations are quoted below:- "PFUTP Regulations, 2003 3. Prohibition of certain dealings in securities No person shall directly or indirectly- (a) buy, sell or otherwise deal in securities in a fraudulent manner; (b) use or employ, in connection with issue, pu....
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....rti Goyal in person and after perusing the records we are of the considered view that there are missing links in the investigation as brought out in the impugned order. While the trading pattern of both the Appellants; placing the buy orders for generally very small number of shares and the timing of the orders; all point towards possible violation of the provisions of PFUTP Regulations it is also possible that an investor through a thorough observation of the movement of the scrip could be placing orders in the system without any intention to manipulate the market. Since the dividing line is very thin and blurred distinguishing both these categories is a difficult, if not impossible, task. Though the learned counsel shed some light on this....
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.... 11. The scrip of Mapro was not a miracle scrip, as reflecteded in its limited trading data given in the impugned order, for the Appellants to place their orders in the early morning itself, mostly just after 9 a.m. at prices higher than LTP by 2 to 4% as if this scrip had to be bought at any cost. Further, if any investor takes such a stand, and if he/she is so convinced of the performance of the scrip, he/she would buy at least a reasonable quantity rather than placing a buy order for miniscule quantities of 1, 2, 5 or 10 shares etc as done by the appellants. 12. Therefore, in conclusion, we are of the considered view that the nature and pattern of trading of the Appellants are violative of the stated provisions of PFTUP Regulations,....