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2020 (2) TMI 1420 - AT - SEBIViolation of SEBI PFUTP Regulations, 2003 - appellants created a misleading appearance of trading and was manipulating the price of the scrip to help offload the shares they were holding - penalty imposed under Section 15 HA of the SEBI Act, 1992 - HELD THAT:- Looking at the pattern of trading done by the appellants and the fact that the appellants have derived considerable financial benefit through that particular scheme or nature of trading we are of the view that the trading pattern adopted by the appellants is of a manipulative and unfair nature and would squarely fall within the ambit of the PFUTP Regulations. The pattern of trade clearly establishes this as it is on 49 occasions that the appellants sold 1 to 5 shares, mostly one share, when in fact the buy orders available in the system was much higher. This behavior cannot be justified in terms of normal rational expectations of a seller. It is on record that the appellants were among the top two net sellers during the relevant period. When the appellants were holding a large number of shares (Appellant No. 1 – 15045 shares and Appellant No. 2 – 1009 shares), their selling miniscule quantity of one share each on more than four dozen occasions is nothing but a strategy of manipulation and unfairly benefiting by off-loading the entire shareholding after raising the price to considerable levels. Penalty imposed on the appellants is on the higher side, particularly, when the entire price rise in the scrip is not on account of the trading done by the appellants. In fact, we note that even when the appellants were not trading between December 24, 2013 to February 17, 2014 the price of the scrip had gone up from ₹ 152 to 182. Similarly, on intermittent dates as well there were trading by others which raised the price as the appellants traded on only 55 days out of the investigation period or even the relevant period which runs into 14 months and 7 months respectively. Therefore, while calculating the profits earned by the appellants and in deciding the quantum of penalty based on the same these facts should have been taken into account as mitigating factors beyond what is apparently done by the AO. While upholding the impugned order on merit we reduce the amount of penalty on Appellant No. 1 from ₹ 45 lakh to ₹ 20 lakh and from ₹ 5 lakh imposed on the Appellant No. 2 to ₹ 2 lakh.
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