TaxTMI 
TaxTMI 
2018 (1) TMI 1762
X X X X Extracts X X X X
X X X X Extracts X X X X
....t. PER: JOG SINGH, MEMBER (ORAL) 1. The appellant, namely - Monarch Networth Capital Limited, is a company duly certified by the Securities and Exchange Board of India [for short 'SEBI'] to act as a Stock Broker on the Bombay Stock Exchange. The appellant claims to have more than two lakh clients, who deal in various scrips of several companies through the appellant. It is submitted by the appellant that it executes thousands of orders on instructions from its clients every day. The appellant neither advises these clients nor does he challenge their wisdom and it simply transacts on their behalf. 2. The appellant has challenged impugned order dated July 31, 2015 by which a penalty of Rs. 35 Lac (Rupees Thirty Five Lac only) has bee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing reply of the appellant on the above SCN and affording him an opportunity of personal hearing thereafter, it has been held by the Ld. Adjudicating Officer of SEBI in the impugned order dated July 31, 2015 as follows: "48. In the instant case, I find that Monarch allowed its client to execute fictitious trades through it. Out of 95,945 shares Mr. Vijay Vora bought from his wife Ms. Hina Vora (one side), Monarch acted as both Broker and counter party Broker for 5,902 shares traded between Mr. Vijay Vora and Ms. Hina Vora. Out of 59,302 shares Vijay Vora sold to Ms. Hina Vora during the investigation period, Monarch acted as both Broker and Counterparty Broker for 41,768 shares traded between Mr. Vijay Vora and Hina Vora. Thus, Mon....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... companies, therefore, no suspicion ever arose in the mind of the appellant in respect of such self trades. The Learned Counsel further submits that the appellant had traded on behalf of about 35000 clients during the investigation period, i.e., 01.01.2009 to 10.05.2010. Even otherwise, Mr. Vijay Vora had been a regular client and out of total of 6,80,540 shares bought through the appellant, the shares bought by Mr. Vijay Vora from his wife Ms. Hina Vora only amounted to 5902 shares. Similarly, out of the total self trades for 18,358 shares executed by Mr. Vijay Vora, the appellant has acted as broker and counterparty broker for only 5087 shares. Keeping in view the large volume of trades undertaken by Mr. Vijay Vora during the relevant per....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Regulations, 1992 which mandates that every broker shall exercise due skill, care and diligence in the conduct of his business. The appellant has, undoubtedly, transacted on behalf of Mr. Vijay Vora and out of 13,24,344 shares which were undertaken by the appellant on behalf of Mr. Vijay Vora, 5087 shares amounted to self-trades. In fact, such self-trades are very harmful in the capital market inasmuch as the buyer and seller both are essentially the same person and there is no change of ownership. This hits at the very foundation of the capital market, as a result of which the respondent is bound to deal with such violations strictly. 10. The appellant submits that the turnover of the appellant company from the impugned trades is small ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... based trading platforms so as to ensure that the trades are executed in accordance with law and do not disturb the market equilibrium. 12. In the case of Madhukar Sheth Vs. Securities and Exchange Board of India [Appeal No. 46/2002 decided on 18.09.2003] the following was held in para 24 - "It is true that a broker cannot act of his own against the instructions of the client. But no one can compel him to be a party to manipulate the market. No doubt the broker is supposed to protect the interest of his client but he is also expected to protect the interest of the securities market in which he operates. It is his duty to ensure not to be a party to any market manipulation and that the market in which he operates is run on a heal....