9911796707
TMI Blog2012 (5) TMI 779X X X X Extracts X X X X X X X X Extracts X X X X ..... being taken from Appeal no. 76 of 2012. 2. The appellant company is a stock broker having its registered office at Mumbai. It is said to be doing proprietary trading from 2 locations through 19 terminals in Mumbai. The terminals are operated by 'jobbers' authorized by the appellant. It traded in the scrip of Edserv Softsystems Ltd. (the company) on the first day of its listing on March 2, 2009 and for a few days thereafter. Since price of the scrip saw an upward movement, the Bombay Stock Exchange Ltd. and the National Stock Exchange of India Ltd. carried out investigations for the period from March 02 - 06, 2009 and March 02 - 09, 2009 respectively into the trading of the scrip. Subsequently, the Securities and Exchange Board of India (t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in the show cause notice as under: Member (Client) Date Buy Qty. Self Trades (No. of shares) Self Trades as a % of total buy by client Total traded Qty. in the scrip on the day Self Trades as a % of total traded qty in the scrip on the day HJSL (Own) March 02, 2009 28,33,872 2,00,725 7.08% 3,41,04,135 0.59% March 03, 2009 2,68,183 23,036 8.59% 42,19,116 0.55% March 06, 2009 1,38,362 1,215 0.88% 36,13,192 0.03% 3. A show cause notice dated June 24, 2011 was issued to the appellant asking it to show cause as to why enquiry should not be held against it and penalty imposed for the aforesaid violations. The appellant submitted its reply dated July 18, 2011 denying the allegations and submitted that on March 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cribed in Schedule II of the stock broker regulations and imposed a penalty of ` 3,50,000 under section 15 HA and 15 HB of the Securities and Exchange Board of India Act, 1992 (the Act). Under similar circumstances, the appellant in Appeal no. 81 of 2012 also traded in the same scrip adopting the same modus operandi and a consolidated penalty of ` 1,50,000 has been imposed upon it. Hence these appeals. 4. We have heard Mr. J.J. Bhatt, learned counsel for the appellants and Mr. Kumar Desai, learned counsel for the respondent Board who have taken us through the records. The trades as mentioned in the show cause notice and executed by the appellant are not disputed. The only defence advanced by learned counsel for the appellant is that the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the part of the appellant in executing these trades and hence the appellant cannot be held guilty of violating the provisions of FUTP regulations or the code of conduct prescribed for the stock brokers. 5. On the other hand, learned counsel for the Board submitted that the facility given by the stock exchange of using own account through trading terminals from more than one location has been misused by the appellant by executing trades through jobbers who are independent day traders. Learned counsel for the respondent Board has also drawn our attention to the standard format of the agreement entered into by the appellant with various operators, who are referred to by the appellant as 'jobbers' and submitted that as per the agreement the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n trades of the appellant's total buy quantity on that day was a self trade on its proprietary account in terms of volume. Similar is the situation on the sale side. It is further noted by the Board that trading pattern in the subsequent day also reflects that one out of eleven trades of the appellants' total buy quantity was a self trade on its proprietary account in terms of volume. This finding of the Board is not disputed by the appellant. If the appellant was operating through jobbers from different terminals, he should have placed some mechanism in place to ensure that his trades do not result in self trades. Simply because the number of such self trades is not large by itself cannot justify execution of self trades. The appellant is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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