TMI Blog2016 (10) TMI 1308X X X X Extracts X X X X X X X X Extracts X X X X ..... l for the appellant that having common address and having shares of Vishvas Securities Ltd. could not be a ground to infer that the appellant was connected with the Vishvas Group is without any merit. In the present case, the Adjudicating Officer has not only established the connection of the appellant with the Vishvas Group but also demonstrated that the trading pattern among themselves resulted in synchronized trades and circular trades which were in violation of the PFUTP Regulations. Appellant had incurred loss by executing the trades in question cannot be a ground to infer that the said trades were not in violation of the PFUTP Regulations. Having violated the PFUTP Regulations, the appellant cannot escape the penal liabilities merely because the appellant chose to incur losses on account of the trades in question. Violations committed by the appellant fall under Section 15HA of SEBI Act and the penalty imposable thereunder was ₹ 25 crore, the Adjudicating Officer has imposed a penalty of ₹ 25 lac against the appellant which cannot be said to be exorbitant or excessively high. It is a matter of record that SEBI has proceeded against various entities of the Vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the investigation period several entities including the appellant herein (hereinafter referred to as Vishvas Group) had allegedly executed synchronized trades, circular trades and reversal trades among themselves and traded in significant variation to the Last Traded Price (LTP) in the shares of Gangotri. e) As the trades executed by the appellant were considered to be in violation of PFUTP Regulations, show cause notice was issued to the appellant. In the reply to the show cause notice, appellant stated that during the investigation period, the appellant had bought only 5804 shares and sold 7000 shares of Gangotri and therefore, the allegation that the appellant had created artificial volume and price manipulation is not sustainable. f) Thereafter several opportunities of personal hearing were offered, however, the appellant failed to avail the said opportunity. Hence on the basis of material on record the impugned order was passed. 3. Mr. Jain, learned Advocate appearing on behalf of the appellant submitted as follows:- a) Fact that the appellant had the same address as that of Avisha Credit and Vishvas Projects Ltd., an entity allegedly connected to the Vishvas Gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respectively. 7. Apart from the above, the A.O. has recorded a finding that in respect of several trades executed by and between appellant and Vishvas Group of entities, the difference between buy order time and sell order time was less than 60 seconds and there was no difference between buy order rate and sell order rate as well as there was no difference between buy order quantity and sell order quantity. Finding of fact recorded in the impugned order relating to the synchronised trades of the appellant with the Vishvas group entities are as follows:- a) Out of the total 20,500 shares of Gangotri bought by the appellant at NSE during the investigation period 5804 shares were synchronized with the members of Vishvas Group viz. Ishita Finstock Ltd. ISF Securities Ltd. b) Out of the total 1,11,400 shares of Gangotri sold by the appellant at NSE during the investigation period 7000 shares were synchronized with the member of Vishvas Group viz. MEFCOM Securities Ltd. One of the instances of the synchronized trade by the appellant with other members of Vishvas Group was that, on 28th April, 2006, the Appellant sold 5000 shares of Gangotri at the rate of ₹ 57.95/- to ME ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contributing significantly to the total volume in the market cannot be faulted. 10. Argument advanced by the counsel for the appellant that having common address and having shares of Vishvas Securities Ltd. could not be a ground to infer that the appellant was connected with the Vishvas Group is without any merit. In the present case, the Adjudicating Officer has not only established the connection of the appellant with the Vishvas Group but also demonstrated that the trading pattern among themselves resulted in synchronized trades and circular trades which were in violation of the PFUTP Regulations. 11. Fact that the appellant had incurred loss by executing the trades in question cannot be a ground to infer that the said trades were not in violation of the PFUTP Regulations. Having violated the PFUTP Regulations, the appellant cannot escape the penal liabilities merely because the appellant chose to incur losses on account of the trades in question. 12. Argument of the appellant that before initiating action against the appellant it was obligatory on the part of SEBI to investigate into the question as to whether the mitigating factors set out in section 15j of sebi act ..... X X X X Extracts X X X X X X X X Extracts X X X X
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