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2019 (9) TMI 246 - AT - SEBIManipulative transactions - artificial trades - violation of SEBI Act and PFUTP Regulations - penalty imposed - HELD THAT:- 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. The appellant and another Noticee No. 3 were the major traders on the market wherein substantial trades matched between them and sizable quantity of self-trades also happened. Though, the appellant had traded in some other time slot as well in moderate quantity as contended, substantive volume of trade was carried out during the closing half an hour of trading clearly demonstrate that the objective was in manipulating the volume and prices though the rise in prices happened to be moderate (1.21%). In any case, volume manipulation is also a market manipulation under PFUTP Regulations, 2003. So the appellant (along with Noticee No. 3) had bought a total of 26.05 lakh shares and sold 20.73 lakh 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 gives the same and in this case we notice that it was a blank power of attorney which was given and that too along with an advance credit amount of ₹ 5 crores. As regards the alleged manipulation in the price volumes of MTNL 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. Trading of this nature and in such huge volumes could not have happened between the parties at such short time intervals of just a few seconds without some prior meeting of their minds. In view of this, we cannot find fault in the findings in the impugned order that the appellants in these appeals have violated Section 12A (a), (b), (c) of the SEBI Act, 1992 and various stated provisions of PFUTP Regulations, 2003. 17. Accordingly, penalty is imposed on Appellants in all these Appeals under Section 15HA of SEBI Act, 1992 for violation of Section 12A (a),(b),(c) of SEBI Act read with various provisions of PFUTP Regulations, 2003. The penalty imposable under Section 15HA of the SEBI Act, 1992 for violations relating to fraudulent and unfair trade practices at the relevant time was twenty-five crore rupees or three times the amount of profits made out of such practices, whichever is higher. In the instant matters wherever there is findings to the effect that profits are made a higher penalty has been imposed while in other cases a lower/ nominal penalty has been imposed by taking the mitigating factors under Section 15J of the SEBI Act into account. Therefore, the submission that the penalties imposed are too harsh also has no merit.
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