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Issues involved: Violation of regulations 4(1) and 4(2) of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003.
Summary: The appeal challenged an order holding the appellant guilty of violating regulations 4(1) and 4(2) of the Securities and Exchange Board of India Regulations. The appellant was accused of executing synchronized trades with brokers and clients, leading to non-genuine transactions in a company's scrip on the Bombay Stock Exchange, resulting in market manipulation. The appellant did not respond to the show cause notice and was fined Rs. 25 lacs. The appellant argued lack of evidence connecting it to the group entities and market manipulation. The adjudicating officer found sufficient evidence of interconnected trades among related entities, supporting market manipulation charges. The adjudicating officer established relationships between the entities involved, indicating coordinated trading activities. Despite the difficulty in obtaining direct evidence of market manipulation, circumstantial evidence pointed to collusion among the entities. The appellant's counsel cited previous cases with reduced penalties for similar transactions involving group entities. The Tribunal upheld the findings but reduced the penalty to Rs. 7 lacs, aligning with previous decisions on comparable cases. In conclusion, the Tribunal upheld the adjudicating officer's findings of market manipulation violations but reduced the penalty to Rs. 7 lacs, in line with precedents.
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