2012 (11) TMI 1235 - Board - Companies Law

Summary

Issues Involved:
1. Violation of Regulation 4 of the FUTP Regulations and clauses A(1) and (4) of the code of conduct for stock brokers.
2. Delay in finalization of proceedings.

Summary:

1. Violation of Regulation 4 of the FUTP Regulations and clauses A(1) and (4) of the code of conduct for stock brokers:
The appellant, a stock broker registered with the Securities and Exchange Board of India (SEBI), challenged an order suspending their certificate of registration for one week. The suspension was due to the appellant's involvement in manipulative and synchronized trades in the shares of M/s. Roofit Industries Limited. The investigation revealed that the appellant executed synchronized trades with another broker, Amgis Holdings Pvt. Limited, which were preplanned and manipulative. The appellant argued that the trades were executed on client instructions without any manipulative intent and that the trades matched due to the trading mechanism of the stock exchange. However, the Tribunal found that the repetition of matching orders indicated synchronization and manipulation, aimed at artificially inflating the share value to benefit certain entities. The Tribunal upheld the finding that the appellant violated regulation 4 of the FUTP Regulations and the Stock Brokers Regulations.

2. Delay in finalization of proceedings:
The appellant contended that there was an inordinate delay in the finalization of proceedings, which prejudiced them. The transactions in question occurred in 2001, but the enquiry proceedings started in 2005, with the final order passed in 2012. The Tribunal acknowledged the delay and its prejudicial effect, noting that justice delayed is justice denied. The Tribunal referenced previous cases, including Subhkam Securities Private Limited and Ms. Aditi Dalal, emphasizing the need for expeditious completion of enquiry proceedings. The Tribunal concluded that while the finding of wrongdoing was upheld, the significant delay warranted a modification of the penalty. Instead of suspending the certificate of registration, the Tribunal decided that a warning to the appellant to be cautious in the future would suffice.

Conclusion:
The appeal was disposed of with the modification that the appellant's certificate of registration would not be suspended, but a warning would be issued instead. No costs were awarded.