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2015 (4) TMI 482 - AT - Indian LawsViolation of Regulation 3(a), 4(1) and 4(2)(a),(b),(e) and (g) of SEBI PFUTP (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 - Violation of Regulation 7 read with Clause A(1), A(3), A(4) and A(5) of Code of Conduct for Stock Brokers under SEBI (Stock-Brokers and Sub-Brokers) Regulations, 1992 - Self trading - Shares purchased at higher price and sold at lower price. Held that:- Regarding submissions of Appellant that price of scrip of SGWL was increasing since start of IP with increase in volume, and hence volatility in scirp, enticed its dealers towards arbitrage opportunity and therefore dealers of AIPL were followers and not creators of the volumes. Ld. AO has rightly held that volumes, increase or decrease, are not concern of regulators, but artificial creation of volumes, through self/fictitious trades, are of concern, which defeat purpose of anonymity of trading system of exchanges and affect investor’s interests, adversely. It has also been held by Ld. AO that there is huge difference in AIPL’s buy and sell volumes, on two days, when self trades were executed and hence not in nature of jobbing. In view of above, AIPL have been held violative of regulation 3(a), 4(1) and 4(2)(a), (b), (e) and (g) of PFUTP Regulations and ABPL held violative in addition to regulation 7 read with Clauses A(1), A(3), A(4) and A(5) of Code of Conduct of Stock-Brokers, as specified in Schedule II of Stock-Broker Regulations. To sum up, facts on record reveal that AIPL which subsequently merged with ABPL, had on November 30, 2009 and December 1, 2009 executed 4 self trades, wherein ABPL acted as broker as well as counter party broker. Moreover, it is found that AIPL had on December 1, 2009 sold shares at lower price and bought shares at higher price, which is contrary to normal jobbing, wherein, normally shares are bought at lower price and sold at a higher price. Although, self trades in question were executed only on two days and there is time gap between buy order and sell order and number of shares may be only 7.45% of total in buy and 10.20% of total sale of SGWL scrip on these two days yet in facts of present case, modus operandi adopted by ABPL/AIPL in executing self trades and that too buying shares at a higher price and selling at a lower price clearly show that the trades executed were not normal trades. In these circumstances, AO is justified in holding that self trades were executed with ulterior motives. Therefore, quantum of penalty imposed upon Appellant based on facts on record, mitigating factors and past conduct of Appellant cannot be faulted. - Decided against the appellant.
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