SAT upholds Sebi order on NCJ Share, modifies penalty

Tribunal has, however, barred the company from taking up new assignments for 2 weeks instead of Sebi's ruling that cancelled its broker registration for one week

The Securities Appellate Tribunal (SAT) today upheld Sebi's order against NCJ Share & Stock Brokers but modified the penalty terms imposed by the market regulator in a case related to fraudulent trading in shares of Sun Infoways.

 

The tribunal has, however, barred NCJ Share from taking up new assignments for two weeks instead of Sebi's ruling that had cancelled the entity's broker registration for one week.

 

Securities and Exchange Board of India (Sebi) had found NCJ Share to have been involved in executing synchronised trades of Sun Infoways scrip along with another broker, Angel Broking.

 

In its order in January this year, Sebi had prohibited Angel Broking from taking up new assignments for period of two weeks and had cancelled the NCJ Share's registration for a period of one week for violating broker norms.

 

Consequently, NCJ Share had approached SAT, challenging Sebi's order.

 

In its order today, SAT said: "Argument of appellant (NCJ Share) that penalty imposed upon appellant is harsh as compared to penalty imposed upon Angel Broking Private Ltd deserves acceptance."

 

Accordingly, SAT said: "While upholding decision of Sebi on merits, we modify order of penalty by prohibiting appellant (NCJ Share) from taking up any new assignment (that is not to take up any new clients) for a period of two weeks as in the case of Angel Broking."

 

SAT noted that since both NCJ Share and Angel Broking have indulged in synchronised circular trades, "question as to whether such trades were executed on clients account or on proprietary account would make no difference to the offence committed by appellant (NCJ) and Angel Broking".

 

Similarly, fact that Angel Broking had reported subsequent manipulative trades of its client cannot be a ground to impose different penalty upon NCJ Share, it said.

 

"...The client was of Angel Broking and not of appellant and consequently there was no occasion for appellant who traded on proprietary account to report the matter to stock exchange," SAT said.

 

The case relates to Sebi probe into dealings in the Sun Infoways scrip between February 5 and May 2, 2001 wherein a consistent fall in price of the firm's scrip was noted.

 

Price of Sun Infoways shares had fallen from Rs 342 as on February 5, 2001 to a low of Rs 60.75 as on April 30, 2001 before finally closing at Rs 73.75 on May 2, 2001.