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TMI Blog2009 (11) TMI 989X X X X Extracts X X X X X X X X Extracts X X X X ..... imposing a monetary penalty of ₹ 4 lacs in all on the appellant. ₹ 2 lacs penalty has been imposed under section 15A(a), another sum of ₹ 1.5 lacs under section 15HA and ₹ 50,000 under section 15 HB of the Securities and Exchange Board of India Act, 1992 (for short the Act). The Securities and Exchange Board of India(for short the board) carried out investigations in the trading in the scrip of M/s. Rohan Finance and Securities Ltd.,(for short the company) whose shares witnessed a sharp price rise from ₹ 9.25 to ₹ 321 per share during the period fr om January 28, 2004 to July 29, 2004 at the Calcutta Stock Exchange. The role of the br okers and their clients was looked into by the Board. It transpired ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m of ₹ 4 lacs as stated hereinabove was imposed. Hence this appeal. We have heard the learned counsel for the parties. There are essentially three charges leveled against the appellant. The first charge is that while executing trades in the scrip of the company on behalf of its clients, it had manipulated those trades as a result thereof the price of the scrip ha d artificially risen from ₹ 10.70 to ₹ 166 during the period from February 4, 2004 to April 21, 2004. It is not in dispute that the appellant executed cross deals on behalf of its clients, buyers and sellers. A cross deal is a trade where the buyer and seller have the same broker. Such deals ipso-facto are not illegal but they have to be executed only on the sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e us that they were. Even in the case of a negotiated deal, it is the duty of the stock broker to ensure that the orders are put into the system at the prevailing market price. In the case before us the price of the scrip of the company had risen from ₹ 10.70 to Rs . 166 and the appellant has been held responsible for this increase. The appellant does not dispute that the price of the scrip did increase. Its case is that it had no role to play in this price rise. We are unable to accept the stand taken by the appellant. The fa ct that the appellant traded both on behalf of the buyer and the seller and the price went up when it traded on behalf of its clients, it is obvious that it contributed towards the price rise and this could n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mation which was incomplete. It did not contain all the necessary details asked for by the investigating officer. Even though the appellant furnished the details of its trades from the Sauda Book, it did not furnish the settlement numbers, order numbers, trade numbers and unique client codes. It also did not furnish the registration forms alongwith their enclosures of top twenty clients who traded through the appellant in the scrip of the company. All these details had been asked for which were necessary for carrying out further investigations. Incomplete inform ation furnished by the appellant amounts to non furnishing of the information within the meaning of section 15A(a) of the Act and it thwarted the investigations. This is, indeed, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manipulation is a serious irregularity and coupled with the fact that the appellant did not cooperate during the course of the investigations and also violated the code of conduct prescribed by the broker regulations, we do not think that any reduction in the penalty is called for. In Appeal no. 49 of 2009 the appellant is M/s. M. Bhiwani wala Company which is also a registered stock broker and it had executed identical trades in the scrip of the company while acting on behalf of the buyers and sellers. In this case also, we have perused the details of the trades executed by the appellant and find that the buy and sell orders were put into the system at almost the same time for the same quantity and for the same rate . It is obvious t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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