Securities Exchange Board of India - Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 1995 - Securities and Exchange Board of India (Stock Brokers and Sub-brokers) Regulations, 1992 - Stock broker - Suspension of certificate of registration - SEBI initiated enquiry proceedings against a stock broker registered with SEBI and a member of NSE, to enquire into alleged violations committed by it while dealing in shares of Company during investigation period - Enquiry Officer found stock broker guilty of violating regns. 4(a),(b),(c) and (d) of PFUTP Regulations and Cls. A(1) to (5) of Code of conduct specified for stock brokers under Stock Brokers Regulations had recommended that its certificate of registration be suspended for a period of 3 months - Notice was issued to stock broker requiring it to show cause as to why action as recommended by Enquiry Officer or any other action as considered appropriate by SEBI should not be taken against it - Hence, present petition for confirmation of suspension of certificate of registration - Held, in order to attribute manipulation and fraud, other attendant factors and circumstances including price rise, circular trading, trade reversals, unfair trade practices and like, over a period of time between parties have to be alleged and established - Simultaneous placing of orders by itself cannot be said to be fraudulent on face of it and that synchronised trades/structured deals are per se not illegal - In the present case, no finding in Enquiry Report as to whether trades of stock broker had artificially increased share price or that same were executed with manipulative intent - Nexus between some of clients and stock broker not established except for observation in Enquiry Report - No material on record in Enquiry Report to show that parties were merely changing positions without actually buying or selling shares - Enquiry Report failed to establish connection between some of clients of stock broker as well as their connection with stock broker - No allegation in notice issued for enquiry or finding in Enquiry Report that share price had artificially increased because of impugned trades of stock broke - Share price was increasing during pre-investigation period with very low volumes - No case that stock broker was involved in trades which were executed during such period - No supporting material to establish that trades of stock broker had artificially influenced price discovery mechanism and satisfy ingredients of regns. 4(a),(c) and (d) of PFUTP Regulations, it cannot be held to be violative of said provisions - Enquiry Officer has not given any finding with supporting material to conclude that trades of stock broker were intended to create artificial volumes and thereby create misleading appearance of trading in shares of Company during relevant period - Even charge of violating regn. 4(b) of PFUTP Regulations could not be sufficiently established - Stock broker entitled for a benefit of doubt in respect of alleged violations of regn. 4(a),(b), (c) and (d) of PFUTP Regulations - As regards violation of provisions of code of conduct for stock brokers, report was silent as to how the violation of provisions was established - Stock broker entitled for a benefit of doubt in respect of charges levelled against it and enquiry proceedings initiated against the stock broker disposed of - Order accordingly.
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