Appeal No.167 of 2012. Case: 1. Mr. Sujit Karkera, 2. Mrs. Shilpa Kotak, 3. Mr. Purushottam Karkera Vs Adjudicating Officer, Securities and Exchange Board of India. Securities and Exchange Board of India
| Case Number | Appeal No.167 of 2012 |
| Counsel | For the Appellants: Mr. Prakash Shah, Advocate and For the Respondent: Mr. Shiraz Rustomjee, Senior Advocate with Mr. Mihir Mody and Mr. Dinesh Mishra, Advocates |
| Judges | P. K. Malhotra, Member & Presiding Officer (Offg.), S.S.N. Moorthy, Member |
| Issue | Securities and Exchange Board of India Act, 1992 - Section 15HA |
| Judgement Date | December 17, 2012 |
| Court | Securities and Exchange Board of India |
Order:
S.S.N. Moorthy
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The appellants are traders in securities. The present appeal is directed against an order passed by the adjudicating officer of the Securities and Exchange Board of India (for short the Board) by which a penalty of Rs. 60,73,316/-, Rs. 54,19,212/- and Rs. 4,66,108/- respectively has been imposed on the appellants. The above penalties were imposed under section 15HA of the Securities and Exchange Board of India Act, 1992 (the Act) in relation to the violation of regulations 3 and 4 of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (FUTP Regulations).
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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 first appellant and Mr. Suresh Menon were examined and it was noticed that during the material period the transactions in the scrips were discussed in clear terms between the two. The transcripts of the telephonic conversation revealed flow of information of the scrip, order quantity, order timing and price of the scrip which were passed on to the appellants by Mr. Suresh Menon while in possession of the orders of CGMMPL. It was therefore alleged that the appellants had prior information of the order details of CGMMPL and had sold shares prior to the selling of the shares of CGMMPL. It was also noticed that after purchasing the shares at a low price when CGMMPL was selling the shares they sold the shares subsequently earning profits. A charge of violation of regulations 3 and 4 of the FUTP Regulations was leveled against the appellants.
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We have heard Shri Prakash Shah, learned counsel for the appellants and Shri Shiraz Rustomjee, learned senior counsel for the respondent Board.
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It was contended by the appellants'' learned counsel that the transactions impugned in the order of the adjudicating officer took place in the ordinary course...
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