Kerala High Court: ED Can Investigate Without FIR in Scheduled Offence Cases (CMRL Matter)  ||  Delhi High Court Upholds TRAI Rule Capping TV Advertisements at 12 Minutes Per Hour  ||  Supreme Court Directs High Courts to Deliver Judgments in 3 Months and Bail Orders in One Day  ||  Supreme Court: Successful Resolution Applicant Cannot Negotiate Further After CoC Approval  ||  Supreme Court: Succession Law Applies, Not Primogeniture, to Ex-Royal’s Private Estate Inheritance  ||  Supreme Court: Writ Jurisdiction Cannot Challenge Arbitrator’s Section 16 Decision  ||  Supreme Court: Sanyasi Status Cannot Be Ground to Reject Land Compensation Claim  ||  Supreme Court: Section 33(1)(a) of Arbitration Act Cannot Alter Nature of Interest in Award  ||  Supreme Court: Society Office Bearers Not Liable for Cheque Dishonour Without Active Business Role  ||  Supreme Court: Asking a Woman to Adjust in Marriage Does Not Amount to Cruelty By In-Laws    

Securities and Exchange Board of India v. Kishore R. Ajmera - (Supreme Court) (23 Feb 2016)

What degree of proof to find brokers liable for fraudulent practices

MANU/SC/0212/2016

Capital Market

The Supreme Court disposed off several appeals against the creation of artificial volumes by two brokers who matched volumes for related clients. The transactions were notable in that volume of trading in such scrips was usually minimal. The Court opined in the absence of direct substantive evidence, courts can take note of immediate and proximate facts and circumstances surrounding the events on which the charges are founded to reach a reasonable conclusion. As such, the test would be: “what inferential process that a reasonable/prudent man would adopt to arrive at a conclusion.” On the facts of the case, though voluminous trading of illiquid scrips was not impermissible per se, the Bombay Stock Exchange had cautioned against the same and asked traders to exercise caution in case of high volume of trading. When over a period of time such transactions had been made between the same set of brokers or a group of brokers a it could be reasonably concluded that there was a concerted effort to indulge in synchronized trades, which resulted in large volumes of fictitious trading, culminating in an unnatural rise in hiking the price of the scrips. By the overall conduct of brokers and their transactions could the court infer not only a lack of due care and caution but also a deliberate intention to indulge in trading beyond forbidden limits.

Relevant : Section 15J Securities and Exchange Board of India Act, 1992

Section 24 of the Act, 1992

Tags : SEBI   MATCHED TRADING   PROOF   CIRCUMSTANTIAL  

Share :        

Disclaimer | Copyright 2026 - All Rights Reserved