sebi:10662

SEBI · SEBI · 2004-03-01 · Madhukar, Whole Time Member

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Facts / Headnote

Censure imposed on the sub-broker

Provisions invoked

Regulations

Parties

Holding

SEBI censured M/s. Fortune Share Brokerage Ltd., a sub-broker, for failing to segregate client funds from its own funds in violation of SEBI Circular No. SMD/SED/CIR/93/23321 dated November 18, 1993, and for discrepancies in client agreement forms. The other charges against the sub-broker were not sustained.

Full text

Whereas, Securities and Exchange Board of India ( hereinafter referred to as SEBI ) conducted an inspection of the books of accounts and other documents of M/s. Fortune Share Brokerage Ltd., a sub-broker, affiliated to OTCEI Securities Ltd., Member-NSE (hereinafter referred to as “sub-broker”) into the alleged violations of provisions of Securities and Exchange Board of India Act, 1992 (hereinafter referred to as “SEBI Act”), Rules, Regulations and Circulars made there under. The inspection revealed various irregularities and violations to have been committed by the sub broker including those of non segregation of client funds from its own funds and discrepancies in client agreement forms; and whereas, vide order dated March 01, 2004 an Enquiry Officer was thus appointed by SEBI under Regulation 5 of SEBI (Procedure for holding enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 (hereinafter referred to as “Enquiry Regulations”) to enquire into the alleged contravention of SEBI Act, SEBI (Stock Brokers & Sub-Brokers) Regulations, 1992 (hereinafter referred to as “Broker Regulations”), SEBI Circulars; and, whereas, the Enquiry Officer after conducting the enquiry in terms of the Enquiry Regulations and while finding that in the facts and circumstances of the case and the reply of the sub broker, albeit the other charges against the sub broker can not sustain, concluded that the sub broker by not segregating client funds from its own funds is guilty of violating

whereas, a copy of the said Enquiry Report was forwarded to the sub broker along with a show cause notice dated November 04, 2004 advising it to show cause as to why appropriate penalty including penalty as recommended by the Enquiry Officer should not be imposed on it; and whereas, the sub broker replied to the said show cause notice vide its letter dated November 24, 2004 and interalia submitted that the minor lapses which were noticed during the inspection will not be repeated and it will take utmost care in carrying out its profession; and whereas, it is observed that the enquiry officer having considered the detailed

MADHUKAR WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA

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Source: SecMarx — sebi:10662. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.