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TMI Blog2019 (9) TMI 246X X X X Extracts X X X X X X X X Extracts X X X X ..... shares between 15:04 and 15:06 hours on August 23, 2010 and matched 78% of buy quantity and 100% of sell quantity of appellant with Noticee No. 3. Such a huge matching cannot happen without prior meeting of minds. Therefore, the contention that appellant had no connection with Noticee No. 3 does not have any merit. Similarly, in the case of Green Field Infrastructure Pvt. Ltd. apellant along with other two appellants in the same appeal and Noticee No. 1 had taken large positions in call options on the same day i.e. April 28, 2010 with a total quantity exercised as 37,73,000 and an amount of ₹ 1,90,65,200 profit made. The submission by appellant in Sandeep Paul Ors. that appellant Sandeep Paul was abroad and not even in India and it is the broker misusing the power of attorney that the impugned trades have been conducted is without any merit since the appellant had not taken any action on the issue. On the contrary, we note that the appellant had continued to deal with the same broker for almost a month thereafter and the appellant also availed the payouts credited to his account. In any case, the responsibility of giving a power of attorney lies with the person who gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Per: Dr. C.K.G. Nair Misc. Application No. 312 of 2015 In Appeal No. 441 of 2015 There is a delay of 85 days in filing the present appeal. Cause shown is sufficient. The delay in filing the appeal is condoned. The delay condonation application is allowed. Appeal Nos. 418, 396 and 441 of 2015 1. These three appeals have been filed to challenge the order of the Adjudicating Officer ( AO for short) of Securities and Exchange Board of India ( SEBI for short) dated April 24, 2015. By the said order 14 entities, including the appellants in these appeals, have been directed to pay varying amount of penalties for violation of Section 12A (a),(b),(c) of the SEBI Act, 1992 read with various provisions of (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 ( PFUTP Regulations for short). Since all these appeals challenge the same impugned order they are decided together by this common order. 2. Facts relevant to all the matters are the following:- SEBI conducted an investigation in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) Sell order for 5 lakh shares at 15:16:13 at a limit price of ₹ 118.95 which was subsequently modified at 15:21:45 when the limit price was increased to ₹ 119.95. b) At 15:16:25 appellant placed a stop loss buy order for 7 lakh shares at a limit price of ₹ 119.00 with a trigger price of ₹ 118.65 which was subsequently modified at 15:21:53 at a limit price of ₹ 120 and trigger price of ₹ 119.65. Thus, it was observed that Noticee No. 12 increased the price of the sell order by ₹ 1 and then within 8 seconds increased the limit price of the buy order as well as the trigger price by ₹ 1. c) Another buy order was placed at 15:29:01 for 9.90 lakh shares (even though there was a pending buy order for 7 lakh shares) at a price of ₹ 120 which was 10.60% above LTP of ₹ 108.50. This buy order executed all the available sell orders at price of ₹ 119.95 or less and a total of 9,90,000 shares were traded between 15:29:01 to 15:29:02. It was noted that Noticee No. 12 had a sell order for 5 lakh shares at a limit price of ₹ 119.95 and thus 1,26,425 shares got matched. d) Furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hearing was given on various dates. The appellants, however, did not avail the same stating that the appellants had already given their written submissions and the AO may proceed with to examine the brokers concerned and pass suitable order. 5. Shri Shyam Mehta, learned senior counsel for the appellants contended that the allegation that the appellants jacked up the price of the scrip of the Power Grid is patently wrong, because, the Appellant No. 1, (Sandeep Paul) who was managing all three appellants in this appeal, (other two appellants being his HUF and Company) was not even in India on April 28, 2010, the alleged trading day. Though, a power of attorney was given to their broker it was for conducting normal trading, no permission was granted for any trade violating any provisions of securities laws. Further, it was contended that the allegation that appellants were connected to another entity (Noticee No. 1) is not true and SEBI has not produced any evidence to this effect. SEBI has not made any investigation into the role of the broker who has done the trading misusing the power of attorney given by the appellants and getting involved in allegedly manipulativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allegation of making profits by taking position in call options fails. Moreover, the appellant had been trading in the scrip of Tata Tele for a long time, not only on August 23, 2010, and even on this day their trades were not confined to the last half an hour of trading as it traded throughout the day. Therefore, SEBI is picking up an arbitrary time slot to draw adverse inferences. There has been no manipulation in the prices as alleged. On August 23, 2010 the highest price was ₹ 25 and the fluctuation was only between ₹ 24.65 to ₹ 25 which is not at all abnormal. The appellant has no connection with another noticee (Noticee No. 3) as alleged nor was aware of trading by Noticee No. 3 as trading is done on the anonymous trading system and some matching as alleged would have happened only by co-incidence. Moreover, there was no self-trades as alleged since the reversal trades got executed after a long time gap of more than half an hour, which cannot be treated as self-trades. Appeal No. 441 of 2015 Seminary Tie-up Pvt. Ltd. (Formerly known as Felex Enterprises Pvt. Ltd.). 7. An analysis of the trading activity of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is Tribunal on account of inordinate delay and one of the parties in the matter, Shyam Sunder Gupta who is Noticee No. 1 and stated to be central figure in these matters has not appealed against the impugned order. We were also told that he neither filed any reply to the show cause notice issued by SEBI nor availed any opportunity of personal hearing etc. These basic facts are stated upfront since the link between various entities is provided in terms of their connection as explained at Para 21 of the impugned order. Some are linked in terms of their relationship and some are linked in terms of their trading activities and KYC documents. 12. Further, we note that the following provisions of Section 12A(a), (b), (c) of the SEBI Act, 1992 read with regulations 3(a),(b),(c),(d) and 4(1), (2)(a),(b),(e) and (g) of PFUTP Regulations, 2003 relied on by the AO are the following:- 12A. No person shall directly or indirectly- ( a) use or employ, in connection with the issue, purchase or sale of any securities listed or proposed to be listed on a recognized stock exchange, any manipulative or deceptive device or contrivance in contrav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tended to effect transfer of beneficial ownership but intended to operate only as a device to inflate, depress or cause fluctuations in the price of such security for wrongful gain or avoidance of loss; ( e) any act or omission amounting to manipulation of the price of a security; ( g) entering into a transaction in securities without intention of performing it or without intention of change of ownership of such security; 13. Given the aforesaid facts and provisions of the SEBI Act and PFUTP Regulations, we do not agree with the contentions of the appellants in all three appeals. Volume of trading, percentage of the market share traded by the appellants, timing of trades etc. are so glaring to ignore the manipulative nature of transactions concerned. For instance appellant in Appeal No. 396 of 2015 (Symphony Merchants Pvt. Ltd.) bought and sold 9,73,449 shares of Tata Tele, which constituted 41.88% of the gross market volume and 59.01% of the net market volume on August 23, 2010 between 15:04 and 15:06 hours. Between August 9 and August 23, 2010, this appellant had accounted for 91% of the buy quantity. The appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which was given and that too along with an advance credit amount of ₹ 5 crores. 15. As regards the alleged manipulation in the price volumes of MTNL on July 28, 2010 a similar picture of trading is available between appellants in Appeal No. 396 of 2016 (Symphony Merchants Pvt. Ltd.) and Appeal No. 441 of 2015 (Seminary Tie-up Pvt. Ltd.) whereby a substantial volume of trading between these entities happened between 15:29:24 and 15:58:25 hours. Therefore, the same set of buyers and sellers who were repeatedly buying and selling and creating artificial volumes without even changing the beneficial ownership. Such artificial trades is clearly violation of PFUTP Regulations, 2003. Similarly, the contention by the appellants in Appeal Nos. 396 of 2015 and 441 of 2015 that they did not take positions in the F O Segment and, therefore, did not make any profit is also without merit since manipulating the market always need not result in making profits to all parties concerned. The quantity of trade, its timing and the nature of trade is sufficient to prove market manipulation and does not matter whether the said manipulation result in profit to all entities involved. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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