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The Securities Appellate Tribunal (SAT) today upheld Sebi's order against Triveni Management Consultancy Services on broker norm violations but set aside the market regulator's charges on fraudulent trading in shares of various companies.
Earlier this year, Securities and Exchange Board of India (Sebi) had imposed a penalty of Rs 1 lakh on Triveni for fraudulent trading and Rs 50,000 for violating stock broker norms in a case related to dealings in shares of Asian Star Company and Lotus Eye Care Hospitals, among others.
The broker had approached SAT challenging Sebi's rulings.
SAT said Sebi's order "is partially set aside" so far as violation of prohibition of fraudulent trading norms is concerned.
"...But since appellant (Triveni) has not carried out his responsibilities under broker's regulations with care and due diligence, he is held to have violated broker's regulations and penalty of Rs 50,000 on appellant for such violation is upheld," said the SAT order.
Sebi had alleged that Triveni on behalf of its clients had dealt in shares of nine companies -- Allcargo Global Logistics, Asian Star Company, KSL & Industries, Lotus Eye Care Hospitals, MVL Ltd, Panoramic Universal, Ushdev International, Sat Industries and KBS Capital Management.
These transactions were said to be in nature of synchronised/structured/circular trades that influenced the volumes and prices of said scrips.
SAT noted that share price of Allcargo, KBS, Lotus, Panaromic had not undergone any huge change.
Besides, it said, no attempt was made to include other possibilities of leading to rise in price of remaining five scrips.
SAT also observed that "the role of appellant in manipulation of five scrips, by executing trades on behalf of his clients, is not conclusive proof of Triveni's manipulation in five scrips under investigation".
As per Sebi's probe in the matter certain entities connected to each other and commonly referred by the regulator as 'Mehta Group' entities had dealt in shares of these firms in a manipulative manner.
Meanwhile, in a separate order, SAT has reduced Sebi's penalty on Manish Mathur, who was CEO of Triveni, from Rs 10 lakh to Rs 1 lakh in the case related to fraudulent dealing in shares of Asian Star Company.
"In the absence of any direct evidence to wholly implicate appellant (Mathur) in the larger conspiracy, we are inclined to give the appellant benefit of doubt as far as the quantum of penalty is concerned," SAT said.
Sebi had alleged that Mathur had connections with the entities belonging to Mehta group which had executed trades through Triveni.
Separately, SAT has set aside Sebi's order against one Bhanwar Lal Paliwal in case related to fraudulent dealings in shares of Asian Star Company.
Sebi had slapped a Rs 5 lakh fine on Paliwal for indulging in synchronised trades in firm's shares through Triveni.
According to SAT, the market regulator "had not produced" enough evidence to substantiate the case.
However, in its rulings against one Usha Mehta, who was also penalised by Sebi for manipulative dealings in shares of Asia Star, SAT has upheld market regulator's order.
SAT said it did not see any reason to interfere with Sebi's penalty of Rs 10 lakh on Mehta.
