Appeal No. 228 of 2012. Case: 1. Ramkishore Maheshwari C/o Crystal Finstock Pvt. Ltd., 2. Bhanwarlal Maheshwari, C/o Crystal Finestock Pvt. Ltd., 3. Nilesh D. Patel C/o Crystal Finestock Pvt. Ltd., 4. Renu Maheshwari C/o Crystal Finestock Pvt. Ltd., 5. Nimbaram D. Prajapati C/o Crystal Finestock Pvt. Ltd. Vs Securities and Exchange Board of India. Securities and Exchange Board of India
Case Number | Appeal No. 228 of 2012 |
Counsel | For the Appellant: Mr. J.J. Bhatt, Advocate with Ms. Rinku S. Valanju and Mr. Pratham Masurekar, Advocates and For the Respondent: Mr. Mihir Mody, Advocate |
Judges | Jog Singh, Member & Presiding Officer (Offg.) and A.S. Lamba, Member |
Issue | SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 - Regulations 4(2)(a),(b) and (g) |
Judgement Date | June 26, 2013 |
Court | Securities and Exchange Board of India |
Order:
Jog Singh (Oral)
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This appeal is directed against the common impugned order dated October 25, 2012 passed by the Adjudicating Officer imposing a monetary penalty of Rs. 4 lac on the Appellant No. 1, Rs. 1,50,000/- on the Appellant No. 4 and Rs. 1 lac each on Appellants No. 2,3 and 5, totalling Rs. 8,50,000/- for violating Regulations 4(2)(a),(b) and (g) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (for short FUTP Regulations) in the shares of Popular Estate Management Ltd., hereinafter referred to as the "PEML".
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The Securities and Exchange Board of India ("SEBI") conducted investigation in respect of trading in the shares of "PEML" during the period from February 9, 2009 to February 24, 2009. Investigations revealed that Appellants'' trading through sub-broker Crystal Finstock Pvt. Ltd. of broker Mehta Equities Ltd. had executed trades among themselves. It was observed that the Appellants were related to each other and having one common address. It was also observed that prior to the period of examination, the scrip of "PEML" was under suspension and same was revoked w.e.f. February 4, 2009 and the scrip opened at Rs. 50/- and closed at Rs. 33.01 with a volume of 1303 shares. The Appellants were connected entities and had executed synchronized reversal trades, cross trades executed by Crystal, through its broker "PEML" on behalf of the Appellants. Thus, some of the Appellants incurred loss whereas the other Appellants earned profit. These transactions appear to be in the nature of profit and loss adjustment.
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A show cause notice was accordingly issued on June 21, 2011 under Rule 4(1) of the SEBI (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 as to why an inquiry should not be held against them and penalty be not imposed for the alleged violations. On a consideration of the documents available on record, oral and written submissions made by the Appellants, the Adjudicating Officer came to the conclusion that the Appellants were guilty of violating the FUTP Regulations. This is how a consolidated penalty of Rs. 8,50,000/- came to be imposed on the Appellants by the impugned order dated October 25, 2012. It is against this order that the present appeal has been filed.
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We have heard both the learned counsel for the parties and have perused the appeal and...
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