The Securities Appellate Tribunal (SAT) has sustained a SEBI order against brokerage firm Angel Broking in a fraudulent trade practice case. The tribunal dismissed the case saying that it found no merit in Angel Broking’s appeal.
In a 13-page order, SAT Presiding Officer Justice J.P. Devadhar said: “At this stage counsel for the appellant (Angel Broking) seeks stay order for a period of four weeks. Accordingly we stay operation of this order for four weeks from today.” Earlier in January, the market regulator had restrained the brokerage firm from taking up any new clients for a period of two weeks for allegedly engaging in synchronised circular trades in the shares of Sun Infoways Ltd in 2001.
Following this, Angel Broking had challenged the SEBI order.
According to the regulator, the trading in the share had generated 26-97 per cent daily volumes thus resulting in a sharp increase in the share price of Sun Infoways.
However, following SEBI investigation into the dealings from February 5, 2001 to May 2, 2001, the Sun Infoways stock witnessed a consistent fall in price accompanied with low delivery. It fell from Rs 342 on February 5, 2001, to a low of Rs 60.75 on April 30, 2001, before finally closing at Rs 73.75 on May 2, 2001.
The tribunal has trashed all the arguments by Angel Broking.
Nil merit
To one argument that that there existed nothing more than a broker-client relationship between Angel and Sun Infoways and that there is no material on record to show that it was connected with the group was quashed as “without any merit.”
Delay no excuse
However, SAT noted that trades executed by Angel Broking on behalf of its client were in 2001 and SEBI had passed the order only in January 2013. “This inordinate delay could have been avoided,” it said and added that the broker cannot escape penalty merely because SEBI had passed that order belatedly.