Appeal No. 211 of 2012. Case: Anita Dalal 13, Ganga Vihar, B Wing, 1st Floor, C Road, 55-Marine Drive, Mumbai - 400 020 Vs Securities and Exchange Board of India SEBI Bhavan, Plot No. C4-A, G Block, BKC, Bandra (E), Mumbai-400051. Securities and Exchange Board of India

Case Number:Appeal No. 211 of 2012
Party Name:Anita Dalal 13, Ganga Vihar, B Wing, 1st Floor, C Road, 55-Marine Drive, Mumbai - 400 020 Vs Securities and Exchange Board of India SEBI Bhavan, Plot No. C4-A, G Block, BKC, Bandra (E), Mumbai-400051
Judges:P.K. Malhotra, Member & Presiding Officer (Offg.) and S.S.N. Moorthy, Member
Issue:Securities and Exchange Board of India Act, 1992 - Sections 11, 11B, 19
Judgement Date:December 03, 2012
Court:Securities and Exchange Board of India
 
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Judgment:

S.S.N. Moorthy, Member

  1. The appellant is an individual investor and also a trader in the securities market. The present appeal is directed against an order passed by the whole time member of the Securities and Exchange Board of India (the Board) on September 25, 2012 by which the appellant was restrained from accessing the securities market and further prohibited from buying, selling or otherwise dealing in securities directly or indirectly or being associated with the securities market in any manner for a period of 18 months. The whole time member passed the impugned order in exercise of the powers conferred upon him by the provisions of Section 19 read with Sections 11 and 11B of the Securities and Exchange Board of India Act, 1992 (the Act) and Regulation 11 of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (FUTP regulations). The Board detected synchronized trades while investigating the dealings in the scrips of Temptation Foods Limited, Bang Overseas Limited (Bang), Confidence Petroleum India Ltd. (Confidence), Cals Refineries Limited (Cals) and Shree Precoated Steels Limited. It was found that a group of connected clients indulged in synchronized trades in the scrips mentioned above contributing to artificial volumes therein. The appellant was found to be connected with the client group which indulged in inflation of volumes in the scrip. A show cause notice was issued to the appellant on July 26, 2011 alleging that the appellant was involved in creating artificial volumes in the scrips of Bang, Confidence and Cals through synchronized/reversal/self trades and so there was violation of the provisions of Regulation 3 and 4 of the FUTP regulations. The appellant replied to the show cause notice denying all the allegations. However, the whole time member of the Board after providing an opportunity of personal hearing to the appellant, passed an order on September 25, 2012 imposing restraint in market operations of the appellant for a period of 18 months as mentioned above. We have heard Shri Gaurav Joshi, learned counsel for the appellant and Shri Shiraz Rustomjee, learned senior counsel for the Board who took us through the records of the case.

  2. The appellant's learned counsel submitted that the appellant cannot be held guilty of synchronization and matching of trades since the appellant was acting as per normal business standards and there was no knowledge about the manipulation indulged in by the connected group who dealt in the same scrip. When the appellant traded in the scrips which were traded by a specific group of entities who indulged in creation of artificial volumes it was but natural that the appellant's trades also got matched though the appellant had no role in it. It is submitted that the appellant acted through her husband Shri C.J. Dalal, who happens to be a broker for the connected group of...

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