SAT cuts broker's share of SEBI circular trading penalty to Rs 50,000

The Securities Appellate Tribunal (SAT) on 13 October 2026 partly allowed an appeal by stockbroker Arcadia Share & Stock Brokers Pvt. Ltd. against a SEBI penalty order. SEBI had imposed a penalty of Rs 7.50 lakh on the broker and 14 others jointly and severally, meaning each could be made to pay the full amount. SAT modified that direction and allowed the broker to pay Rs 50,000 as its pro-rata share.

What Happened

A SEBI adjudicating officer passed the order on 28 December 2022 for violations of the SEBI Act and SEBI's regulations against fraudulent and unfair trade practices. According to the SAT order, SEBI's allegation was that the broker's proprietary trades in the Darshan Orna scrip on 7, 8 and 9 January 2019 amounted to circular trading with 14 others.

The broker told SAT that it had traded in the scrip but had not taken part in circular trading, that it had no connection with the other 14 noticees, and that the SEBI order recorded no loss to any third party or unlawful gain. It offered to pay a pro-rata penalty of Rs 50,000 to close the case. SEBI argued that joint liability was imposed because the noticees had together carried out circular trading. SEBI told the tribunal that recovery proceedings had begun but nothing had been recovered so far.

SAT noted that trades on exchange platforms are screen-based with anonymous buyers and sellers. It held that the SEBI order did not disclose any connection between the broker and the other noticees, and that no specific finding was shown to support joint and several liability. Following an earlier SAT ruling of 18 May 2023, it permitted the broker to pay Rs 50,000 within four weeks. The rest of the SEBI order was left undisturbed.

What It Means

The ruling shows that where SEBI makes several parties jointly liable for one penalty, SAT may look for a finding that links them; where none is shown, it has allowed a party to pay only its share. For investors and market participants, the SEBI finding against the broker itself stands, as the tribunal changed only how the penalty is shared. SAT's order may be appealed to the Supreme Court.

Source: SAT order