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TMI Blog2015 (7) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... s by executing 375 trades, involving 1206 shares in scrip of VIL and contributed to increase/decrease in LTP and also played crucial role in establishing new high/low in the same scrip and also executed six self-trades, two of these being executed by Appellant No.2 as broker and counter-party broker – and hence it will not in interest of justice to discharge the two Appellants from alleged violations as stated against them, due to improper handling of entire adjudication proceedings by Ld.A.O. - Case is remanded back to Respondent. - Appeal No.367 of 2014, Appeal No.384 of 2014 - - - Dated:- 27-2-2015 - A. S. Lamba, J. For The Appellant : Mr. Ravi Ramaiya, Chartered Accountant For The Respondent : Mr. Kumar Desai, Advocate with Mr. Tomu Francis, Advocate Per : A.S. Lamba 1. Appellant No.1 (Shri Vasantlal Mohanlal Vora) being aggrieved by order no. EAD-2/DSR/VVK/R6/199-200/2014 dated August 27, 2014 and subjected to a penalty of ₹ 5,00,000/- under Section 15HA for violation of provisions of Regulation 3(a), (b), (c), (d) and 4(1), 4(2)(a), 4(2)(b) and 4(2)(g) of Securities and Exchange Board of India (Prevention of Fraudulent and Unfair Trade Practices) R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, it is stated that Appellant No.1 s self-trade in 6 instances and traded for 12 shares (actual number is 11) during September 22, 2010 to March 30, 2012 and in 4 instances, out of 6, orders were placed near to LTP and in other two instances order were placed above LTP and in 2 instances, out of six, Arcadia Share Stock Brokers Pvt. Ltd. was the broker and counter-party broker. It is also stated in SCN para 6 that Appellant No.1, established new high price during I.P. in 87 trades and contributed ₹ 435.45 to overall new high price (% of Appellant contribution to new price high in market at 12.02%) and established new price low in 50 trades and contributed ₹ 193.15 to overall new low price (% of Appellant s contribution to new low price in market at 15.08%) and finally executed 375 trades for purchase of 680 shares and sale of 526 shares of VIL scrip during I.P. 4. In view of above, it is stated in para 8 of SCN that, Appellant No.1 due to his self trades and resultant monetary profit gained, has violated Regulations 3(a), (b), (c), (d) and 4(1), 4(2)(a), 4(2)(b), 4(2)(e) and 4(2)(g) of PFUTP Regulations. 5. In reference to gain from self trades, it is not c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave been stated and some more submissions like during his trading in PIL price was ₹ 830/- per share and that market volume was 11,628 shares and his volume as % of total trade was 5% and he incurred loss of ₹ 33,180/- while trading in VIL and that of Appellant No.2 who submitted that his relation with Appellant No.1 was of client broker, earned brokerage only, 2 self trades occurred through him, for his clients for 5 shares and there was considerable difference in timing of placing buy and sell orders, that self trades occurred at market price, self trader s buy/sell orders were placed from two different terminals and second dealer placing buy/sell order for Appellant No.1 was not aware of existing pending sell/buy order of Appellant No.1, while placing orders. Appellant No.2 has also submitted that 2 self trades of Appellant No.1 took place from trading terminal of its sub-broker and orders in trading system are placed after viewing, informing and considering best available buy and sell order in existing trading terminal, and at no time, orders were put higher than best available prices and incident of self trading was coincidence and not outcome of any design. 10. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f market manipulation due to his total trading. 13. Appellant No.1 is thus held vioaltive of market manipulation due to his self trades, which was the allegation in SCN, and here the same is upheld thus rejecting Applicant No.1 s submissions that these were meagre by stating that these self trades were fraudulent and fictitious and created artificial volumes in the scrip. 14. But in the next para 22, Ld. A.O. states that it is difficult to conclude that the two Appellants by executing self-trades had contributed in establishing a new high and low price in scrip of VIL, as the orders were punched at the relevant market price and the same cannot be concluded as price manipulation. Here again Ld. A.O. is intermingling self trades and total trades, since self trades were at market price but manipulated market volume which is an allegation held against Appellant No.1, but his total trading contributed to establishing new high/law, but here it is stated execution of self-trades contributed to establishing new high and low price but it is also admitted by Ld. A.O. that self-trades were at market price. 15. Similarly, it is not explained as to how Appellant No.2 is held violat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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