sebi:AD/HS-B-UPSE/PT/07/09
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Facts / Headnote
Proceedings concluded without imposing any penalty; charges not established.
Provisions invoked
- s. 15H
Regulations
- Reg. 7
- Reg. 4(b)
- Reg. 4(2)
Parties
- M/s Haryana Securities, Member UPSE (SEBI registration No.INB100726219)
Holding
The AO concluded the adjudication proceedings against M/s Haryana Securities without imposing any penalty, holding the material insufficient to establish the charges of trading in small quantities in violation of Code of Conduct, self-trading, trading on behalf of a suspended member, and non-reporting of off-market transactions.
Full text
Page 2 of 7 03. Not being fully satisfied by the response of the broker, SEBI vide order dated July 28, 2009 (communicated on August 26, 2009) appointed me the Adjudicating Officer (hereinafter referred to as “AO”) to inquire into and adjudge Under Section 15HA and 15HB of the SEBI Act, the alleged violation by the broker.
Page 3 of 7 in its books of accounts in 2006-07 were paid back to him on September 28, 2007 and as on the closing day of the financial year 2007-08 nothing was due to Shri Hira Lal Khatri. Vide letter dated December 11, 2009 the broker also submitted that irregularities notices during inspection were unintentional and while assuring not to repeat the mistakes in future, requested for dropping of the present proceedings.
Page 4 of 7 09. On the face of it, I agree that trading in small quantity per se, is neither wrong nor prohibited. But, if there is a pattern or all the trades are executed in small quantity only and that too across the stock exchange wherein majority of the sellers/buyers are only brokers executing trades in their proprietary accounts, the integrity of those trades becomes doubtful. As there is a cost involved in each trade, execution of small quantity trades only do not make any economic sense. As agreed by the broker in its statement during inspection, these small quantity trades executed by most of the brokers of UPSE in propriety account result in making paltry earnings/losses. In such a case, the explanation that these trades are being conducted just to continue and to carry on their business inherited from their forefathers as they are emotionally attached to it, is not very convincing. One is bound to get the feeling that there may be something more to it than what meets the eye. However, as already stated, these transactions per- se, cannot be fit-in in any of the requirement which can be alleged to have been violated by the broker and therefore, the charge of violation of Clause A (1) of Code of Conduct can not be said to be established and no penalty can be imposed only on the basis of assumption/doubt. It is however open to department/SEBI to address this larger issue administratively including by issuing administrative warnings to the concerned brokers.
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Source: SecMarx — sebi:AD/HS-B-UPSE/PT/07/09. 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.