Analysis of SAT Judgement in Jignesh Shah vs. SEBI

The proximity of time between the buy and sell orders may not be conclusive in an isolated case, however, if such trades take place over a period of time then such trades could be considered to have been executed by way of fraudulent/ manipulative exercise with prior meeting of minds.

The Tribunal, relying on the judgement of Apex Court in the case of SEBI v/s Kishore Ajmera reported in (2016) SCC 368 has held that the proximity of time between the buy and sell orders may not be conclusive in an isolated case, however, if such trades take place over a period of time then such trades could be considered to have been executed by way of fraudulent/ manipulative exercise with prior meeting of minds. In the present case, facts on record clearly reveal that hundreds of reversal trades were executed between a group to which the appellant was a party. In these circumstances, in our opinion, the inference drawn by the WTM of SEBI that the trades executed by the appellant were violative of the PFUTP Regulations cannot be faulted. Consequently, the direction issued against the appellant, restraining him from accessing the securities market for a period of three years from the date of the impugned order cannot be faulted.

Judgement link : http://sat.gov.in/english/pdf/E2018_JO2016155.PDF