Appeal No. 320 of 2014. Case: Quantum Global Securities and Leasing Company Ltd. Vs Securities and Exchange Board of India. Securities and Exchange Board of India

Case NumberAppeal No. 320 of 2014
Party NameQuantum Global Securities and Leasing Company Ltd. Vs Securities and Exchange Board of India
CounselFor Appellant: G.K. Mishra, Advocate and B.L. Aggarwal, Advs. and For Respondents: Kumar Desai and Anubhav Ghosh, Advocates i/b The Law Point
JudgesJ.P. Devadhar, J. (Presiding Officer) and Dr. C.K.G. Nair, Member
IssueSecurities And Exchange Board Of India Act, 1992 - Sections 15HA, 15HB, 15J
Judgement DateJanuary 18, 2017
CourtSecurities and Exchange Board of India

Judgment:

J.P. Devadhar, J. (Presiding Officer)

  1. Appellant is aggrieved by the order passed by the Adjudicating Officer ("AO" for short) of Securities and Exchange Board of India ("SEBI" for short) on 22nd July, 2014. By that order, penalty of Rs. 60 lac is imposed on the appellant under Section 15HA of the Securities and Exchange Board of India Act, 1992 ("SEBI Act" for short) for violating the provisions contained in the SEBI Act and SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 ("PFUTP Regulations" for short) and Rs. 15 lac under Section 15HB of the SEBI Act for violating the Code of Conduct for Stock Brokers specified under the SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992 ("Brokers Regulations" for short).

  2. Appellant is a registered stock broker and by the impugned order penalty is imposed because, the appellant is found to have indulged in synchronized trades, circular trades and reversal trades in the scrip of M/s. Gangotri Textiles Ltd. ("Gangotri" for short) during the investigation period with the entities who had contributed towards Last Traded Price (LTP) variation in the scrip of Gangotri.

  3. Counsel for the appellant fairly stated that the appellant does not dispute the findings recorded by the AO that the appellant had indulged in synchronized trades, circular trades and reversal trades in the scrip of Gangotri. However, it is contended that there were no malafide intention to violate the SEBI Act and the regulations framed thereunder and therefore, the penalty imposed against the appellant is wholly unjustified.

  4. Arguments advanced by Counsel for the appellant that the penalty imposed is exorbitant, unreasonable and excessive can be summarized as follows:-

    (a) It is submitted that various entities involved in the present case had repeatedly indulged in such violations, whereas, the appellant has committed such violation only once and, therefore, the AO ought to have taken a lenient view and ought not to have imposed penalty against the appellant.

    (b) The AO failed to take into consideration various mitigating factors set out under Section 15J of SEBI Act before imposing penalty on the appellant.

    (c) The annual turnover of the appellant for last several years has been around Rs. 5 lac per year and hence imposing penalty of Rs. 75 lac in the facts of present case is wholly unjustified.

    (d) In para 32 of the impugned order the AO has recorded a...

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