BEFORE THE SECURITIES APPELLATE TRIBUNAL
MUMBAI

   Appeal No. 105 of 2011  
   Date of decision: 27.07.2011 

Samradha Finstock Pvt. Ltd.
703, Gaurav Villa,
Mahavir Nagar,
Kandivali (W),
Mumbai – 400 067. …… Appellant

                      Versus 

Securities and Exchange Board of India
SEBI Bhavan, Plot No. C-4A, G Block,
Bandra Kurla Complex, Bandra (East),
Mumbai – 400 051. …… Respondent
Mr. Deepak Dhane, Advocate for the Appellant.
Mr. Kumar Desai, Advocate with Ms. Harshada Nagare,
Advocate for the Respondent
CORAM : Justice N.K. Sodhi, Presiding Officer
P. K. Malhotra, Member
S.S.N. Moorthy, Member

Per : Justice N.K. Sodhi, Presiding Officer (Oral)
The appellant before us is a trader in the securities market. It has been
trading, among others, in the scrip of Tasc Pharmaceuticals Ltd. (hereinafter
called the company). A show cause not ice dated November 24, 2009 was issued
to the appellant alleging that it had thr ough its broker executed circular trades by
synchronizing them with the buy/sell orde rs placed by a group of other brokers
who were acting on behalf of their respectiv e clients. Investigations revealed that
the appellant and some other traders including Pritam Mohite, Chirag Tanna,
Manoj Barola and Sunil Purohit joined ha nds in executing trades in the scrip of
the company through their resp ective brokers and traded in a circular fashion by
executing synchronized/matched trades on the trading platform of the stock
exchange. Adjudication proceedings were initiated against the appellant and

2
others. The appellant did not file a ny reply to the show cause notice. The
adjudicating officer after holding an enquiry concluded that the charge against the
appellant and other trader s stood established and by se parate orders monetary
penalties were imposed on these traders and their respective brokers. By order
dated March 31, 2011 a penalty of Rs.2,50,000/- has been imposed on the
appellant for the aforesaid illegalities and this order is now under challenge in this
appeal with which we are concerned.

2. We have heard the learned counsel for the parties. Th e learned counsel
   appearing for the respondent Board has placed before us in the form of charts the
   trades executed by the appellant with other traders which are not in dispute
   though the appellant disputes that they are ci rcular in nature. It is clear from the
   record that on 18 th September, 2003 the appellant sold 5,000 shares of the
   company to Pritam Mohite at 10:06:32 hrs. and an equal number of shares were
   purchased by it from Pritam Mohite on the same day between 13:14:24 to
   13:47:10 hrs. It is, thus, clea r that the appellant executed reverse trades. This is
   not a solitary instance. Several trades in a similar manner were executed by the
   appellant not only with Pritam Mohite but also with Chirag Tanna, Majoj Barola
   and Sunil Purohit all of whom had placed orders through their respective brokers.
   Similarly, we have on record the pattern of circular trades executed by the
   appellant with other named entities who formed a group. On October 30, 2003
   one Chirag Tanna sold 2,000 shares of the comp any to Pritam Mohite at
   10:34:43 hrs. Pritam Mohite sells 2000 shares on the same day to the appellant at
   10:53:06 hrs. The appellant then sells those shar es to Chirag Tanna at
   12:43:15 hrs. In other words, the shares which started from Chirag Tanna came
   back to him through Pritam Mohite and th e appellant. These trades are fictitious
   and circular as they do not transfer the beneficial ow nership in the traded scrip
   and only create artificial volumes on the tr ading screen of the exchange and are
   meant to attract/lure the lay investors. Such trades are manipulative and are
   prohibited by the Securities and Excha nge Board of India (Prohibition of
   Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations,
3. The circle referred to above is not a solitary instance and we have a 3
   number of such circles. We are, therefore, satisfied th at the charge of circular
   trading and executing reverse trades as levelled against the appellant stands
   established. In this view of the matte r, no fault can be found with the impugned
   order levying a nominal penalty of Rs.2.5 lacs.
   In the result, the appeal fails and the same is dismissed with no order as to
   costs.
   Sd/- Justice N. K. Sodhi Presiding Officer Sd/- P. K. Malhotra Member Sd/- S.S.N. Moorthy Member 27.7.2011
   Prepared and compared by-ddg

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