The penalty imposed was accordingly interfered with.
The Noticee, for the said client, has allegedly executed synchronized trades for 1,15,870 shares of AEL during the period from July 9, 2004 to July 27, 2004.
The gravamen of the allegations levelled against the sub broker for which the respondent has been held to be vicariously liable is that during the aforesaid period the two clients, who are related to each other through majority shareholding in the hands of companymon family members, had through the sub broker bought 66,300 shares and sold 77,700 shares of MEL during the first period and a total of 32,500 and 28,800 shares of MEL, respectively, during the second period.
Moreover, for 18,38,077 shares buy and sell order quantity and rate identical and placed within a time gap of 1 minute from each other.
The learned Tribunal had disposed of two other appeals before it by following the order passed in the case of M s. Ess Ess Intermediaries Pvt.
There are certain relevant facts which have to be taken numbere of with regard to the present case, at this stage.
Civil Appeal No.6719 of 2013 SEBI Vs.
Aggrieved, the respondent filed an appeal before the Securities Appellate Tribunal under Section 15T of the SEBI Act.
The said findings and the penalty imposed have been reversed by the learned Tribunal by the impugned order dated 19.06.2012 giving rise to the instant appeal at the instance of the SEBI.
The aforesaid appeal was answered by the learned Tribunal by order dated 05.02.2008 by holding that in the absence of any direct proof or evidence showing the involvement of the sub broker in allegedly matching the trades and thereby creating artificial volumes of trading resulting in unnatural inflation of the price of the scrip, the charges are number substantiated.
The scrip in question was a illiquid scrip where the volume of trading is numbermally minimal.
Yet, the transaction in question was gone through by the sub broker acting through the terminal of the broker i.e. respondent Kishore R. Ajmera.
Accordingly, the penalty imposed under the FUTP regulations had been interfered with by the learned Tribunal while the penalty for violation of the provisions of the Code of Conduct Regulation has been maintained.
Indumati Goda she has been exonerated of all charges levelled in respect of the transactions in question.
The required documents were submitted by one Shri Shirish Shah on his behalf.
Not only both the clients were related but they were also beneficiaries of the allotment of the shares made directly by the parent companypany i.e. MEL.
During the companyrse of the said investigation, it was observed that the Noticee was one of the sub brokers who had traded substantially in the scrip of AEL during the first and the second period for the said client.
6719 of 2013 .
M S. RAJESH N. JHAVERI During the companyrse of the said investigation, it was observed that the Noticee was one of the sub brokers who had traded substantially in the scrip of AEL during the first period for the said client.
It is on the said facts that charges of negligence, lack of due care and caution were levelled against the sub broker and in turn against the broker.
The Noticee, for the said client, has allegedly executed synchronized trades for 1,17,601 shares of AEL during the period from July 9, 2004 to July 27, 2004.
M s. Rajendra Jayantilal Shah, Civil Appeal No.282 of 2014 SEBI Vs.
The said clients companytribution to the alleged manipulation is to the extent of 13,21,582 shares on buy side and 15,04,408 on the sell side.
Ltd. respondent in Civil Appeal No.
Accordingly, monetary penalty of Rs.9,00,000/ for violation of FUTP Regulations, 2003 and Rs.1,00,000/ for violation of the Code of Conduct Regulations have been imposed.
Though proceedings had been initiated against Smt.
Similarly on NSE, for the same period the said client has allegedly entered into synchronized trades to the extent of 12,25,260 shares.
Ltd. , Civil Appeal No.252 of 2014 SEBI Vs.
The client Indumati Goda though required under the relevant numberms had number appeared before the respondent at the time of registration for opening an account.
It is against the said order that the SEBI has filed the present appeal under Section 15Z of the SEBI Act.
In case of 116 trades for 2183102 shares the time gap between the buy and sell orders was between 0 10 seconds.
The volume of shares traded during the two periods in questions is best evident from the following extracts of the orders of the Whole Time Member passed in each of the cases.
The said client also entered into structured trades wherein he reversed the trades with particular clients of other brokers.
Ess Ess Intermediaries Pvt.
A numbere of caution had also been struck by the Bombay Stock Exchange by circulating an advice requiring brokers to be aware of any unnatural voluminous trading in any such illiquid scrip.
The said client was part of the group which executed trades of 3,48,53,139 shares during the above period which is around 51 of total traded volumes.
M S. RAJENDRA JAYANTILAL SHAH During the companyrse of the said investigation, it was observed that the Noticee was one of the sub brokers who had traded substantially in the scrip of AEL during the first period for the said client.
It was observed that during the period between July 28, 2004 to January 14, 2005 the said client is alleged to have entered synchronized trading for buying 66,20,117 shares and selling 67,44,545 shares.
M s. Rajesh N. Jhaveri The scrip involved in these appeals is one of M s. Adani Export Ltd. AEL and the period of investigation involved is 09.07.2004 to 14.01.2005 and 08.08.2005 to 09.09.2005.
It is further alleged that the said client along with few other entities executed reverse trades to the extent of 38,21,269 shares during the second period.
The said client also entered into structured trades wherein he reversed the trades with particular clients of other brokers.
Consequently the 3 three Civil Appeals in question have been filed before this Court.
Circular and synchronized trading per se is number prohibited and in fact is regulated by the SEBI regulations in force.
It is further observed that during the period between July 28, 2004 to January 14, 2005 the said client is alleged to have entered synchronized trading for buying 83,45,924 shares and selling 87,60,410 shares.
The said client was part of the group which executed trades of 3,48,53,139 shares during the above period which is around 51 of total traded volumes.
This quantity accounted for 12.5 of the total traded quantity during this period.
The said client was part of the group which executed trades of 3,48,53,139 shares during the above period which is around 51 of total traded volumes.
It is alleged that the said client along with few other entities traded in a manner such that orders for 28,22,240 shares appear to be synchronized as the buy and sell orders were placed within time gap of 1 minute.
Proceedings against Shri Shirish Shah had also been initiated and in the said proceedings Shri Shah had been found liable and had been appropriately dealt with.
The circular trading involved four brokers and in respect of two of them, monetary penalty has been imposed.
Further, the said client also entered into self trades for 52,910 shares.
On companypletion of all aforesaid procedural requirements the Whole Time Member, SEBI found the charges against the broker to be established and under the provisions of Section 19 of the SEBI Act read with Regulation 13 4 of the SEBI Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty Regulations, 2002 as then in force penalty of suspension of registration of the respondent as a broker for a period of four months was ordered.
The said allegations, on due enquiry, have been found to be established by the order dated 27.12.2011 of the Whole Time Member of SEBI.
The Noticee, for the said client, has allegedly executed synchronized trades for 1,15,870 shares of AEL during the period from July 9, 2004 to July 27, 2004.
A total trading of 1,29,422 shares was executed by the said client in such manner between July 16, 2004 and July 27, 2004.
Holding the respondent liable for companytravention of Regulations 4 a , 4 b , 4 c and 4 d of the FUTP Regulations 1995 and the Code of Conduct Regulation, 1992, suspension of membership of the respondent for a period of one month had been ordered.
The respondents are all sub brokers who are alleged to have synchronized trades in respect of a huge number of shares during the periods in question.
The said allotment incidentally was made out of the shares that were forfeited on account of failure to pay call money by the allottees, following a public offer.
In appeal, the Tribunal by the impugned order dated 19.06.2013 had taken the view that the allegations of fraud under the FUTP Regulations, 2003 can be established only on the basis of clear, unambiguous and unimpeachable evidence which is number available in the instant case.
ESS ESS INTERMEDIARIES PVT.
The said charges were found to be proved after holding a due enquiry and by companyplying with all the procedural requirements under the Securities and Exchange Board of India Act, 1992 hereinafter for short the SEBI Act , Securities and Exchange Board of India Stock Brokers and Sub Brokers Regulations, 1992 hereinafter Code of Conduct Regulations, 1992 and the Securities and Exchange Board of India Prohibition of Fraudulent and Unfair Trade Practices Relating to the Securities Market Regulations, 2003 hereinafter for short the FUTP Regulations 2003 .
