TMI Blog2005 (2) TMI 878X X X X Extracts X X X X X X X X Extracts X X X X ..... f the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulation, 1994. Regulation 4 of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulation, 1994 reads as follows: 4. No person shall a) ........ b) Indulge in any act which is calculated to create a false or misleading appearance of trading on the securities market. c) Indulge in any act which results in reflection of prices of securities based on transactions that are not genuine trade transactions. 3. A company called M/s. Intellivision Software Limited (ISL) had forfeited 31,00,000 shares vide its Board resolution dated 05/04/2000 for non-payment of call money. Out of these f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nchronized or matched deals, SEBI has passed the impugned order directing the appellants to disassociate themselves from the market for a period of 6 months. Being aggrieved, the appellants' have filed the present appeals. It is the appellants' contention that there is no bar against trading between related entities as long as such trading is not aimed at creating a false or misleading appearance of trading in securities market or such trading results in reflection of prices of securities based on transactions that are not genuine trade transactions. It is the case of the appellants that these couple of transactions were undertaken by the appellants, who are undoubtedly related to each other, for tax planning and other purposes and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.95 11.95 11.95 11.95 3775 7. It is clear from the above graph that the respondent SEBI has taken objection basically to the trades entered into on 19/02/2002 and 20/03/2002. We notice from this graph that both these trades have been entered into on the basis of the prevailing market price on the previous day. We also notice that it is nowhere SEBI's case that the appellants had any role to play either in taking the price of the scrip to the artificially high level of ₹ 104/- per share on 15/02/2002 or to bringing it down to ₹ 11.95 on 10/04/2002. We have carefully perused the investigation report dated 26.6.2002. A detailed investigation was conducted with respect to the conduct of the appellants for the period of 15/02 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the appellants. 9. We have also perused the circular dated 14.9.1999. All that the circular says is that negotiated deals shall be executed on the screen of the exchange. In this case, admittedly all deals were on the screen of the exchange. 10. In the order passed in ICICI Brokerage Services Ltd., cited by the appellants the respondent has acknowledged that negotiated deals have to be done through the price and order matching mechanism of the stock exchange. SEBI itself has recognised in that order that the synchronised trades are not per se illegal unless they have the effect of manipulating the market. Specifically, in the said order, the respondent found that all the ingredients of synchronised trading were present in the trad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipants to deny investors other than those within a closed group, a chance to participate in the trading system of the stock exchange and these are used as tools for manipulation of the price and volume of shares. For the above reason, although it cannot be said that synchronized deals are per se illegal, for the same reason, it cannot be said that all synchronized transactions are legal and permitted. All synchronized transactions which have the effect of manipulating the market are against fair market practices and hence undesirable and prohibited. (emphasis supplied) 12. We are fully in agreement with the above observations made by Chairman, SEBI in the proceedings against ICICI Brokerage Services Limited. A reading of the Regulation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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