SAT upholds Sebi order against JHP Securities

Securities Appellate Tribunal today upheld Sebi's order against JHP Securities in a case related to fraudulent dealings in shares of Gemstone Investment Ltd.
The Securities and Exchange Board of India had found that the brokerage had executed manipulative trades on behalf of six clients in shares of Gemstone Investment, violating norms related to the 'Prohibition of Fraudulent and Unfair Trade Practices' as well as those pertaining to broker regulations.
Accordingly, the market regulator had imposed a penalty of Rs 8 lakh on JHP Securities following which the broker had approached SAT challenging the order.
In an order today, SAT said that "since fraudulent transactions took place from the terminal of the appellant (JHP Securities) in the ordinary course of business and since fraud between the six clients and employee of the appellant is established, appellant cannot escape liability.

"In these circumstances, no fault can be found with the decision of Sebi in imposing penalty upon the appellant".
It also dismissed JHP Securities' defence that it was the broker's employee who executed all manipulated trades in the Gemstone Investment's shares, for the six clients, without its knowledge.
Sebi had probe had found that JHP Securities had traded on behalf of its clients -- Prem Parekh, Mala Hemanth Seth, Kishore Chauhan, Hemanth Seth, Bhavesh P Pabari and Ankit Sanchaniya -- and purchased 71.62 lakh shares of Gemstone Investment and sold 68.40 lakh company shares, during the period August 28, 2006 to August 21, 2008.