Appeal No. 227 of 2012. Case: Crystal Finstock Pvt. Ltd. Vs Securities and Exchange Board of India. Securities and Exchange Board of India

Case NumberAppeal No. 227 of 2012
CounselFor 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
JudgesJog Singh, Member & Presiding Officer (Offg.) and A.S. Lamba, Member
IssueSecurities and Exchange Board of India Act, 1992 - Section 15HB
Judgement DateJune 26, 2013
CourtSecurities and Exchange Board of India

Order:

Jog Singh (Oral)

  1. The present appeal is directed against the impugned order dated October 25, 2012 by which a total penalty of Rs. 2 lac has been imposed on the appellant under Section 15HA of the Securities and Exchange Board of India Act, 1992 for the violation of Regulations 4(2)(a) and 4(2)(b) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (FUTP Regulations). Out of this Rs. 2 lac penalty, Rs. 1 lac has been imposed under Section 15HB of the SEBI Act, 1992 for violation of Clause A(1) of the Code of Conduct for Sub-brokers as mentioned in Schedule in Schedule II of Regulation 15 of SEBI (Stock Brokers and SubBrokers) Regulations, 1992 (Broker Regulations).

  2. The appellant is sub-broker and main allegation against him is that he along with certain other entities mentioned in para 3 of the impugned order aided and abetted in creating artificial volume in the scrip of Popular Estate Management Ltd., hereinafter referred to as "PEML". Further allegation is that the Appellant was a party in manipulating the price of the scrip by executing synchronized, cross and reversal trades on behalf of clients in question. A show cause notice was accordingly issued on June 21, 2011 under Rule of the SEBI (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995. Appellant replied to the same but it was not found satisfactory as such Adjudicating Officer was appointed by the Respondent under Section 15 I of the SEBI Act read with Rule 5 of the SEBI (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995. After considering the defence of the Appellant and after affording an opportunity of hearing, the learned Adjudicating Officer came to the conclusion that the Appellant was guilty of violating the said FUTP Regulations and also Clause A(1) of the Code of Conduct meant for Sub-brokers for violations of said Broker Regulations. This is how a consolidated penalty of Rs. 2 lac came to be imposed on the Appellant by the impugned order dated October 25, 2012.

  3. We have heard both the learned counsel for the parties and have...

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