2011 (8) TMI 1289 - AT - Companies Law

Summary

Issues involved:
The judgment involves the execution of matched and synchronized trades in the scrip of a company, violation of Securities and Exchange Board of India regulations, imposition of monetary penalties on the appellants, and discrepancies in penalty amounts imposed on different appellants for similar wrongdoings.

Execution of Matched Trades:
The appellants were found to have executed matched and synchronized trades in the scrip of a company through a common broker, violating the provisions of Securities and Exchange Board of India regulations. The trades were found to be non-genuine, aimed at creating artificial volumes in the market. The common broker manipulated the trades by matching buy and sell orders for the same price, quantity, and time, which is not in line with exchange mechanisms. The appellants traded exclusively in the scrip during a specific period, with no other traders involved, indicating a coordinated effort.

Violation of Regulations:
The appellants were found to have violated Regulations 3 and 4 of the Securities and Exchange Board of India regulations, which prohibit fraudulent and unfair trade practices in securities. The trades executed by the appellants were deemed non-genuine, further supporting the violation of these regulations. The adjudicating officer's findings in this regard were upheld by the tribunal, concluding that the appellants engaged in prohibited trading practices.

Discrepancies in Penalty Imposition:
The tribunal noted discrepancies in the penalty amounts imposed on different appellants for similar wrongdoings. While a base penalty of Rs. 3 lakhs was set for executing manipulative trades, some appellants were subjected to higher penalties without clear justification. The tribunal found no evidence to support the increased penalties for certain appellants and adjusted the penalties to be uniform at Rs. 3 lakhs each, except for one appellant who also faced an additional penalty for non-compliance with investigative summonses.

Conclusion:
The appeals were dismissed by the tribunal, upholding the imposition of penalties on the appellants for their involvement in matched and synchronized trades. The penalty amount for each appellant was standardized at Rs. 3 lakhs, except for one appellant facing an additional penalty for non-compliance, resulting in a penalty of Rs. 4 lakhs. The impugned orders were modified accordingly, with no additional costs imposed.