2010 (10) TMI 1162 - AT - Companies Law

Summary

Issues involved: Appeal against order prohibiting trade recommendations, alleged manipulation of stock price, confirmation of ex-parte order, pending investigations.

Details of the judgment:

1. The appeal was directed against an order confirming an ex-parte ad-interim order prohibiting the Appellant from giving trade recommendations for listed companies. The Appellant, a registered stock broker, issued reports predicting the price of a particular scrip to be significantly higher after 18 months, leading to allegations of misleading investors. The Securities and Exchange Board of India (SEBI) found evidence of manipulation in the market and issued the ex-parte order pending investigations.

2. The Appellant claimed to provide comprehensive investment banking facilities and stock broking services, with a large retail network. SEBI's investigations into the manipulation of the scrip were ongoing, and the whole time member confirmed the ex-parte order based on the advanced stage of the investigation. The Appellant denied the charges and defended its research analysis reports. The Appellant appealed the order, seeking revocation of the interim direction.

3. The Tribunal heard arguments from both parties and noted that the investigations were still pending, with the Appellant out of the market for over 18 months. The technical aspects of the research analysis report required expert analysis, and the Tribunal refrained from making any comments that could prejudice either party. The Tribunal found that the equities of the case demanded vacating the interim order against the Appellant to allow the investigations to proceed in accordance with the law.

4. The Tribunal allowed the appeal, set aside the order confirming the ex-parte order, and directed SEBI to continue with the investigations. The Tribunal emphasized that its decision should not be construed as an opinion on the issues raised by the parties and ordered no costs to be awarded.