According to SEBI, the entire modus operandi of the case was first allot shares of the company (of a weak fundamentals) on a preferential basis; then announce a stock split; pump up the share prices artificially; and eventually provide an exit to the preferential allottees at a higher price. SEBI Order had held that the mechanism is presumably being used to deceive the authorities by laundering black money and making tax-free profits by misuse of stock market platform.
SAT set aside SEBI Order analyzing the facts & circumstances of the case and held that (1) making profits ipso facto cannot be termed illegal or manipulative or fraudulent or in violation of PFUTP Regulations and (2) having a business connection with the Company, without any other evidence, cannot prove being a part of the scheme of manipulating the price or some collusion for a serious charge.
Regstreet Law Advisors represented the lead appellants who were alleged to be connected with the company and its promoters.