TMI Blog2021 (1) TMI 763X X X X Extracts X X X X X X X X Extracts X X X X ..... s below the LTP because only if sell orders are placed a bit below the LTP large quantities could be sold in a falling market. Therefore, clearly the strategy of trading [momentum trading] adopted by the appellants was creating its own momentum inimical to the interest of the securities market. Even if it affected only about 10 % of the market volume in the scrip of Blue Blends, as contended by the appellants, it is no consolation since influencing 10% of the market by 2 entities is a significant deviation from market equilibrium. Therefore, de hors the connectivity issue itself the appellants are in violation of the PFUTP regulations by the very nature of their trading strategy and trading pattern. Mitigating factors are inbuilt in the given punishments. 4 weeks restrain from the securities market as directed by the WTM and ₹ 5 lakhs joint and several penalty imposed by the AO are not harsh or disproportionate in the given facts and circumstances for us to interfere with the impugned orders. However, if the appellants so desire they may pay ₹ 2.5 lakh each - Appeal dismissed. - Appeal Nos. 189 to 192 of 2020 - - - Dated:- 20-11-2020 - Justice Tarun Agarwala, Pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt period. 4. It is the stand of the learned authorized representative Shri Ravi Ramaiya appearing on behalf of the appellants that the appellants are big traders/jobbers dealing in several hundred scrips worth several crores; they are not related/connected entities; were trading in the scrip of Blue Bends even prior to the investigation period; executed genuine trades in both phase I and phase II of the investigation period without any intention to manipulate the price/market; during both phases some trades of the appellants impacted LTP negatively; appellants trades resulted in both positive and negative LTP but SEBI cherry-picked some trades only to show negative impact; appellants followed a strategy called momentum trading i.e. being a big trader taking advantage of the movement in prices by placing large number of orders; on connection between the appellants SEBI never sought any explanation from the broker who filed the KYC forms which are used to conclude connection between the appellants; the volumes of trades of the appellants (even if they are combined) are not substantial as a percentage of the total market volume because the scrip was a liquid one; no meeting of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through common e-mail ID, common mobile number etc. as obtained from the broker. He further submitted that even without the connection being established the trading pattern/strategy of the appellants itself was violative of PFUTP Regulations. It was further contended that the submissions of the appellants that they were following 'momentum strategy' also cannot be accepted since by their strategy the appellants themselves were creating the momentum. It is a clear case of impacting the market in the scrip both in terms of volumes and prices and, therefore, violative of stated provisions of PFUTP Regulations. 7. The learned counsel for the respondent SEBI also relied on the decisions of this Tribunal as well as the Hon‟ble Supreme Court in Kalpana Dharmesh Chheda Anr. vs. SEBI (Appeal No. 454 of 2019, decided on February 25, 2020), Shri Lakhi Prasad Kheradi vs. SEBI (Appeal No. 232 of 2017, decided on June 21, 2018), Giriraj Kumar Gupta HUF vs. SEBI (Appeal No. 420 of 2019, decided on February 25, 2020), Jayprakash Bohra vs. SEBI (Appeal No. 162 of 2019, decided on November 5, 2019), Saumil Bhavnagari vs. SEBI (Appeal No. 28 of 2014, decided on March 21, 2014), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough 166 trades [109 by BP Fintrade and 57 by BP Comtrade] a gross LTP difference of ₹ 183.30 and a net LTP difference of ₹ 33.90 had been generated. 10. Having heard the learned counsel/authorized representative for the parties at reasonable length and having perused the documents placed before us, we are of the considered view that the nature/pattern of trading adopted by the appellants is not in the nature of what a rational investor would do. A large number of sell orders were placed repeatedly on several trading dates at less than the LTP; it is illogical. Therefore, the contention of the appellants that it was following momentum trading has no meaning as by placing a large number of orders below the LTP the appellants themselves were creating a momentum. Of course we notice that a number of orders of the appellants were placed on or marginally above LTP, but that is the rational behaviour expected from a seller and no fault can be found for SEBI in not considering such trades as violative of the PFUTP Regulations. Appellants submission of a small list of trades in which they impacted LTP both positively and negatively on a few days also does not help the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X
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