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TMI Blog2021 (1) TMI 763X X X X Extracts X X X X X X X X Extracts X X X X ..... meaning as by placing a large number of orders below the LTP the appellants themselves were creating a momentum. Of course we notice that a number of orders of the appellants were placed on or marginally above LTP, but that is the rational behaviour expected from a seller and no fault can be found for SEBI in not considering such trades as violative of the PFUTP Regulations. Further, it is also on record that in 124 out of 166 times sell orders were placed in single digits of 1, 2, 3 etc shares, which defies the submission of the appellants that they were placing orders below the LTP because only if sell orders are placed a bit below the LTP large quantities could be sold in a falling market. Therefore, clearly the strategy of trading [mom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r dated May 5, 2020 passed by the Adjudicating Officer (hereinafter referred to as 'AO') of SEBI whereby a joint and several penalty of ₹ 5 lacs have been imposed on the appellants. Appeal Nos. 189 and 190 of 2020 challenges the WTM order and Appeal Nos. 191 and 192 of 2020 challenges the order of the AO. Since the issues in all the 4 appeals are common, by consent of parties, they are heard together and is disposed of by this common order. 2. The matter relating to all the appeals emanates from trading in the scrip of M/s. Blue Blends (India) Ltd. (hereinafter referred to as the company/Blue Blends). SEBI conducted an investigation into trading in the scrip of this company during the period September 1, 2015 to April 1, 2016 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout any intention to manipulate the price/market; during both phases some trades of the appellants impacted LTP negatively; appellants trades resulted in both positive and negative LTP but SEBI cherry-picked some trades only to show negative impact; appellants followed a strategy called "momentum trading" i.e. being a big trader taking advantage of the movement in prices by placing large number of orders; on connection between the appellants SEBI never sought any explanation from the broker who filed the KYC forms which are used to conclude connection between the appellants; the volumes of trades of the appellants (even if they are combined) are not substantial as a percentage of the total market volume because the scrip was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nization of Securities Commissions (IOSCO). It was further contended by the learned counsel for the respondent that in such kind of unilateral price manipulation, establishing connection with the counter-party is difficult as well as not needed because the trades themselves are manipulative. For instance, the appellants sold the shares of Blue Blends in small quantities below the LTP on 166 occasions and thereby manipulated the price downwards. Selling below the LTP and that too on a large number of occasions is contrary to the normal market behaviour and therefore, it stands on its own legs as violative of the stated provisions of Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Secur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 21 of 2012, decided on April 23, 2012), SEBI vs. Kanhaiyalal Baldevbhai Patel [(2017) 15 SCC 1], SEBI vs. Kishore R. Ajmera [(2016) 6 SCC 368], N. Narayanan vs. Adjudicating Officer, SEBI [(2013) 12 SCC 152], SEBI vs. Rakhi Trading Private Limited [(2018) 13 SCC 753]. 8. Summary of the analysis of trades carried out by the connected entities as sellers during the relevant period is as follows :- Seller Name All trades LTP Diff. > 0 LTP Diff. < 0 LTP Diff. = 0 % of negative LTP to Total Market Negative LTP Sum of LTP (Rs.) Sum of Qty. No. of trades Sum of LTP (Rs.) Sum of Qty. No. of trades Sum of LTP (Rs.) Sum of Qty. No. of trades Sum of Qty. No. of trades BP FINTRADE PRIVATE LIMITED -21.05 106263 476 104.65 70 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e PFUTP Regulations. Appellants submission of a small list of trades in which they impacted LTP both positively and negatively on a few days also does not help the appellants since the overwhelming evidence is clearly towards placing sell orders below the LTP. When such trades are done on a large number of occasions, such as 166 times, one cannot but come to the conclusion that such trades are manipulative in nature. Given such large number of instances of trades in these appeals, judgments relied on by the appellants are distinguishable. 11. Further, it is also on record that in 124 out of 166 times sell orders were placed in single digits of 1, 2, 3 etc shares, which defies the submission of the appellants that they were placing orders b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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