SAT upholds Sebi's Rs 8 lakh fine on entity in Asian Star case


The Securities Appellate Tribunal (SAT) today upheld Sebi's penalty of Rs eight lakh on one Sandeep Jain for allegedly indulging in fraudulent trading practices in shares of Asian Star Company Ltd (ASCL).

Sebi in its probe had identified Jain as one of the persons involved in manipulative trades in ASCL shares.

In its order, SAT said that it was "fully satisfied that the adjudicating officer (of Sebi) has placed sufficient material on record to conclude that the transactions were manipulative in nature".

Jain in his letter to Sebi dated January 27, 2009 has not denied these transactions, it added.

Besides, Jain had submitted to SAT that that the penalty was "excessive" and "grossly disproportionate".

However, SAT said it observed that if a person indulges in fraudulent and unfair trade practices relating to securities, he would be liable to a penalty of Rs 25 crore or three times the amounts of profit made out of such practices, whichever is higher.

"The adjudicating officer has imposed a penalty of Rs 8 lakh only. We do not find it disproportionate to the allegation established against the appellant (Jain)," SAT added.

Sebi had conducted a probe in shares of ASCL and noticed a wide variation in the price of the scrip, during October 10 - November 20, 2008.

The regulator found that certain entities including Jain, had indulged in circular/reversal/synchronised trades in a manner which lead of creation of artificial volume in the scrip. These entities were found to be connected to each other.

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