SAT Remands Matter to SEBI over Unconsidered Appellant Submissions on Trade Motivation by UPSI

Case Details: Quantum Securities (P.) Ltd. v. Securities and Exchange Board of India - [2023] 149 taxmann.com 430 (SAT-Mumbai)

Judiciary and Counsel Details

• • Justice Tarun Agarwala, Presiding Officer, M.T. Joshi, Judicial Member
    & Ms Meera Swarup, Technical Member
  • Mustafa Doctar, Sr. Adv., Sandeep Parekh, Dinkar Singh, Rahul Das, Mihir Deshmukh, Parker Karia, Advs. for the Appellant.
  • Gaurav Joshi, Sr. Adv., Mihir Mody, Arnav Misra, Mayur Jaisingh, Advs. for the Respondent.

Facts of the Case

In the instant case, the Whole Time Members (WTM) of SEBI found that the appellant being an advisor/team member of the NDTV group, traded in the scrip of the company while in possession of Unpublished Price Sensitive Information (UPSI) concerning the company ‘NDTV’, resulting in a wrongful gain of Rs. 2.2 crores. As a result, the appellant violated regulations 3 and 4 of the SEBI (Prohibition of Insider Trading) Regulations, 2015.

Further, SEBI’s findings revealed that there exists a close interconnection among all the appellants involved in this case. Therefore, it was highly likely that the alleged Unpublished Price Sensitive Information (UPSI) was communicated by the appellant to these individuals, who subsequently engaged in trading NDTV shares during the relevant period.

Further, the WTM directed the respective appellants to disgorge the said amount jointly and severally along with an interest at the rate of 6% per annum from April 17, 2008 till the date of actual payment.

Further, all the appellants were restrained from accessing the securities market or dealing with securities for a period of two years. Aggrieved by said common order, the appeals were filed with the Securities Appellate Tribunal (SAT).

It was noted that while passing the impugned order, the WTM had not dealt with submissions of the appellant that none of the trades were motivated by any of PSI/UPSI or that the trades were carried out in the ordinary course of business, or that the appellant had a large number of trades in various shares during the relevant period and trades in NDTV were comparatively minuscule.

SAT Held

The SAT, while quashing the impugned order held that it would be necessary to remand the matter to WTM to reconsider all the issues afresh and the impugned order was to be quashed and set aside.

List of Cases Referred to

• • Pia Johnson v. SEBI [Appeal No. 59 of 2020, dated 8-4- 2022] (para 15)
  • Abhijit Rajan Rituraj v. SEBI [Appeal No. 232 of 2016 dated 8-11-2019] (para 24).