SAT sets aside one-month suspension of broker

The Securities Appellate Tribunal has set aside one month’s suspension of Khandwala Securities that was imposed on it by SEBI for unfair trading practices, saying that the market regulator’s proceedings “dragged on” for several years.

However, upholding the alleged violations committed by Khandwala Securities in trading of shares of the company Kopran, SAT has given a warning to the broker.

“... while upholding the violation as found by the whole-time member, we hold that a warning to the appellant (Khandwala Securities) to be careful in future would be reasonable and would meet the ends of justice,” SAT said in its order on September 7.

Noting that delay defeats justice and the very purpose for which proceedings are initiated, the tribunal said in the present case, the suspension of certificate of registration after a period of 12 years from the commission of the violation cannot be regarded as reasonable or justified.

“Even after giving due allowance for the period consumed in consent proceedings, the proceedings dragged on for several years between 2003 and 2012,” the order said.

SEBI had started the investigation in the case in 2000.

In January 2012, it found the Khandwala Securities guilty of violating the norms on trade practices and broker regulations and passed an order suspending the certificate of registration of the entity for a period of one month.

The market regulator’s probe revealed that during February 22-29, 2000, price of Kopran shares rose from Rs 159 to Rs 256.70 at NSE and from Rs 152.50 to Rs 260 at BSE.

It was revealed that the Khandwala Group consisting of Khandwala Securities, Khandwala Finance and Jayantilal Khandwala & Sons was the major trader during that period.

These entities were allegedly involved in cross deals.

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