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2008 (5) TMI 729 - SECURITIES APPELLATE TRIBUNAL, MUMBAIOffence under SEBI ACT - Insider trading - Possession of unpublished price sensitive information - violation of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 - HELD THAT:- In view of the interpretation of regulation 3 and on the admitted facts of this case, there would be a presumption that the appellants being insiders, traded on the basis of the unpublished price sensitive information in possession of Gandhi and the onus to rebut that presumption was on them. They have not only failed to rebut the presumption but have not even attempted to offer an explanation as to the basis which prompted them to trade. Faced with this situation, the learned counsel for the appellants contended that at no stage of the proceedings were they asked for an explanation as to the basis of their trade and, therefore, there was no occasion for them to offer an explanation. We cannot accept this contention. The appellants were clearly informed in the show cause notice that they “had sold 3600 shares on 21.1.1999 (before the board meeting) and 22.1.1999 (in the first half hour before the market could react to the news) on the basis of unpublished price sensitive information”. In view of this specific allegation and considering the fact that the appellants are insiders there was a presumption against them and it was for them to have offered an explanation to rebut that presumption. The facts which prompted the appellants to trade in the scrip of the company while in possession of unpublished price sensitive information were only within their knowledge and it was for them to spell out those facts to rebut the presumption raised by regulation 3 against them. So much so, we asked the learned counsel for the appellants during the course of the hearing to tell us the reasons which prompted/motivated the appellants to trade in the scrip, being insiders. He was unable to offer any explanation. It is, thus, clear that the appellants have failed to discharge the onus of rebutting the presumption raised against them under regulation 3 of the regulations. They must, therefore, fail. Therefore, it is not necessary to deal with the other contentions raised by the learned counsel for the appellants. We hold that the appellants were guilty of insider trading. The penalty levied on them is not on the higher side keeping in view the seriousness of the charge and, therefore, it does not call for any interference in appeal. The appeal is accordingly dismissed with no order as to costs.
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