SAT reduces penalties on JV Stock Broking, SPFL Securities

The Securities Appellate Tribunal on Friday reduced the amount of penalty levied on JV Stock Broking and SPFL Securities and directed the firms to remit a total fine of Rs 35 lakh and Rs 15 lakh, respectively, for indulging in fraudulent trading in the scrips of two different companies.

While JV Stock Broking is a trader, SPFL Securities is a broker, according to the order of the tribunal.

In 2017, the Securities and Exchange Board of India (Sebi) had imposed a fine of Rs 25 lakh each on both the firms. JV Stock Broking was fined for indulging in manipulative trading in the shares of Sky Industries and SPFL was penalised for violating code of conduct for stock brokers.

Similarly, in 2018, the markets regulator again imposed a fine of Rs 20 lakh on JV Stock Broking and Rs 5 lakh on SPFL for manipulative trading in Mindvision Capital Ltd's scrip.

Through its order on Friday, the tribunal upheld the regulator's order passed in 2018 but reduced the amount of penalty levied on the firms through orders issued in 2017.

In the case of JV Stock Broking, the fine has been reduced to Rs 15 lakh and SPFL now has to pay the fine of Rs 10 lakh. Earlier, for both the firms, the fine amount was Rs 25 lakh each.

"In the given facts and circumstances of these appeals while upholding the impugned orders on merit, we are of the view that an intervention is needed as far as the amount of penalty is concerned," the tribunal said.

"Appellants JV and SPFL are directed to pay the total penalty of 35 lakh and 15 lakh respectively within 30 days from the date of this order," the tribunal's order added.

The tribunal while reducing the fine amount said the "violation is of similar nature, the period of violation is broadly the same and, hence, we find there is an inter se disproportionality in the penalty imposed particularly in respect of the broker".

Sebi during its investigations found that the firms had executed self trades and synchronised trades in the scrip of Sky Industries and Mindvision Capital Ltd.

Besides, it noted that JV Stock Broking had violated the Prohibition of Fraudulent and Unfair Trade Practices regulations and SPFL Securities violated Code of Conduct for Stock Brokers.