The Securities Appellate Tribunal (SAT) on Tuesday upheld Sebi's order against Angel Broking in a case related to fraudulent trade practices in Sun Infoway shares.
Earlier this year, the Securities and Exchange Board of India (Sebi) had barred Angel Broking from taking up any new assignments for a period of two weeks after finding that the broker had executed trades on behalf its client in shares of Sun Infoway which were synchronised circular trades.
Consequently, Angel Broking had approached the tribunal challenging Sebi's order.
In its order today, SAT said it found "no merit in the appeal" and accordingly "dismissed" it.
Angel's argument that there existed nothing more than broker-client relationship and that there is no material on record to show that it was connected with the group is "without any merit", it observed.
Besides, SAT did not accept the broker's argument that turnover in Sun Infoways shares was minuscule compared to its large turnover and hence penalty should not have been imposed.
"One who has violated provisions of Sebi Act and regulations made thereunder must suffer even if turnover in the scrip in which violations are found is minuscule compared to the total turnover of that person," SAT said.
However, SAT noted that trades executed by Angel Broking on behalf of his client were in 2001 and Sebi had passed the order only in January 2013.
"This inordinate delay could have been avoided," it said adding, however, that the broker cannot escape penalty merely because Sebi had passed that order belatedly.
Meanwhile, SAT has imposed a "stay operation" on its order against Angel Broking for 4 weeks.
The case relates to Sebi probe into dealings in the Sun Infoway scrip during February 5, 2001 to May 2, 2001 wherein a consistent fall in price of the firm's scrip was noted.
Price of Sun Infoway shares had fallen from Rs 342 as on February 5, 2001 to a low of Rs 60.75 as on April 30, 2001 before finally closing at Rs 73.75 on May 2, 2001.