TMI Blog2013 (2) TMI 521X X X X Extracts X X X X X X X X Extracts X X X X ..... ions. Thus no hesitation in holding that the alleged transactions of the appellant are in the nature of "front running". The appellants in the present case are traders and not intermediaries. So, following decision in the case of Dipak Patel (2013 (2) TMI 464 - SECURITIES APPELLATE TRIBUNAL, MUMBAI), it is hold that the appellant cannot be held guilty of violating the provisions of regulations 3 and 4 of the FUTP Regulations as that the provisions of regulation 3 are wide in their sweep and application. However, the fact remains that regulation 4(2)(q) of the FUTP Regulations has made a specific provision in respect of manipulative, fraudulent and unfair trade practices indulged in by an intermediary. When a specific provision is availa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (FUTP Regulations). 2. The Board investigated the trading activity of the appellants. It was observed that the group, while trading through B P Equities Pvt. Ltd., was trading ahead of the trades of Citigroup Global Markets Mauritius Pvt. Ltd. (CGMMPL) for the period October 01, 2008 to December 31, 2008 and the trades were put in with prior knowledge of the trades of CGMMPL. The impugned trades related to the orders of CGMMPL in the scrip of Aurobindo Pharma Ltd., ICICI Bank Ltd. and State Bank of India. The prior knowledge in the trading of the above scrips was obtained from Mr. Suresh Menon, a trader of CGMMPL. Call records of the Mr. Sujit Karkera, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere was no "front running" in the transaction in the alleged scrips and the adjudicating officer wrongly held the appellants as violating regulations 3 and 4 of the FUTP Regulations. He also made a reference to the order of this Tribunal Dipak Patel v. Adjudicating Officer, SEBI [2012] 4.1 The learned senior counsel appearing for the Board reiterated all the arguments which were advanced in support of the order in the case of Dipak Patel (supra) mentioned supra. He also mentioned that the transcripts of the telephonic conversation in the present case clearly establish prior information regarding the order, time and quantity of the scrips transacted and this has to be regarded as a serious wrong doing in the market. According to him, regul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nclusion because of the specific departure made by the regulator while framing the regulations of 2003 and repealing the regulations of 1995. This is what we have observed in the case of Dipak Patel (supra). "13. We are inclined to agree with learned counsel for the appellants that the 1995 Regulations prohibited front running by any person dealing in the securities market and a departure has been made in the Regulations of 2003 whereby front running has been prohibited only by intermediaries. The cases cited by the learned senior counsel for the Board and referred to above also relate to front running by intermediaries and not by other traders in the market. In the absence of any specific provision in the Act, rules or regulations prohib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... audulent and unfair trade practices indulged in by an intermediary. The legal position as regards the provisions of section 4(2)(q) has been dealt with at length in the order of this Tribunal in the case of Dipak Patel (supra) mentioned above. When a specific provision is available in respect of violation of the regulations it is necessary to apply the specific regulation. In the present case, the general provisions contained in regulation 3 of the FUTP Regulations cannot be applied to the facts of the case since it is squarely covered by specific provision contained in regulation 4(2)(q) of the FUTP Regulations. There is no specific provision in the Act, rules or regulations prohibiting front running by a person other than an intermediary. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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