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The Securities Appellate Tribunal (SAT) today upheld Sebi's orders that had slapped a fine on Triveni Management Consultancy Services and one Sunil Mehta for fraudulent trade in the Asian Star Company Ltd (ASCL) stock and violation of other norms.
Sebi, through two separate orders issued in 2012, had slapped a fine of Rs 25 lakh on Triveni for fraudulent trade in the ASCL scrip and failure to comply with stock brokers' norm, while a penalty of Rs 30 lakh was imposed on Mehta for indulgence in fraudulent trading in the company's scrip.
Accordingly, the two entities appealed to SAT against Sebi's order.
SAT in its today's order noted: "... Role of appellant (Triveni) in manipulation of ASCL's traded volume and not meeting obligations under stock brokers regulation, have been amply proved, appeal does not deserve to be allowed and is hereby dismissed."
Regarding Mehta, SAT said "appellant (Mehta) indulged in manipulation of ASCL scrip and created artificial volume and manipulated price of ASCL scrip and thus violated provisions ...Of Prohibition of Fraudulent and Unfair Trade Practices Regulations and in view of these violations, which have been substantiated, the appeal of appellant does not succeed."
"Appellant (Mehta) was the brain behind Mehta Group and was directing most of the action of the Group, which engaged in manipulation of volumes of ASCL scrip for creating artificial volumes through reversal, synchronisation and structured trades in the scrip," it added.
Sebi, in its probe, noticed a spurt of about 19% in the price of ASCL shares between October 10 and November 20, 2008, while the BSE 30 stock index, Sensex, had dropped over 19% during the period.
The regulator found Triveni had placed manipulative orders for ASCL shares in the accounts of its clients and Mehta had carried out synchronised trading in ASCL scrips through other brokers.
It observed certain entities connected to each other had indulged in circular/reversal synchronised trading in a manner that led to creation of artificial volume in the scrip.
These entities are collectively referred to as the "Mehta Group" by Sebi.
The regulator found that Triveni funded the transactions of Mehta Group and failed to abide by the code of conduct for stock brokers. The broker was also noted to be the largest contributor to the volumes in the scrips.
