Securities Appellate Tribunal, Mumbai bench
Networth Stock Broking Ltd.
V/s.
Securities and Exchange Board of India
APPEAL NO. 5 OF 2012
JUNE 19, 2012
ORDER
P. K. Malhotra, Members Presiding Officer (Offg.)
This appeal has been filed against the order dated December 27, 2011 passed by the whole time member of the Securities and Exchange Board of India (for short the Board) under regulation 28(2) of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008 holding the appellant guilty of violating regulation 4 (a), (b), (c) and (d) of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 1995 (for short FUTP regulations) and clause A (2), (3), (4) and (5) of the Code of Conduct prescribed for the stockbrokers in Schedule II under regulation 7 of the Securities and Exchange Board of India (Stock broker and Sub-broker) Regulations, 1992 (for short Stockbrokers Regulations) and suspending the certificate of registration of the appellant for a period of one month.
2. The appellant is a public limited company which is registered as a stockbroker with the Board. It had executed trades on behalf of its clients, among others, in the scrip of G. G. Automotive Gears Ltd. (for short the company). The Board carried out investigations in the dealings of the scrip of the company for the period from August 1, 2002 to October 16, 2002 and it found that a group of four member brokers, including the appellant, and their clients traded in the scrip of the company in a circular manner intra day for forty days during the investigation period. The appellant had executed trades on behalf of its client Ms. Indumati Goda. Proceedings were intitiated against the brokers and their clients separately around the same time. Show cause notice dated June 5, 2006 was issued to the four brokers including the appellant alleging that the four member brokers and their clients had traded in a circular pattern intra day for forty days during the period of investigation. The brokers and their clients involved in the circular trading alongwith the contribution of each was referred to in the show cause notice in the form of a table which is reproduced hereunder for facility of reference:-
