sebi:AO/BJD/MAS/EAD/44/2017
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Facts / Headnote
Violation established; penalty of Rs. 2,00,000 imposed under Section 15HB of the SEBI Act
Provisions invoked
- s. 15
- s. 15H
Regulations
- Reg. 7
- Reg. 10
Parties
- Nirmal Bang Securities Pvt. Ltd. (NBSPL)
Holding
The Noticee (Nirmal Bang Securities Pvt. Ltd.) violated Clause A(2) of the Code of Conduct for Stock Brokers by failing to exercise due skill, care and diligence while dealing for its client Majestic Garments Pvt. Ltd., whose self-trades created artificial volumes. A penalty of Rs. 2,00,000 was imposed under Section 15HB of the SEBI Act.
Full text
Page 2 of 21 behalf of its client, M/s Majestic Garments Pvt. Ltd.(hereinafter called as Majestic/ the client), which had resulted in self-trades, wherein the same client appeared as both buyer and seller and the Noticee appeared as both the buying broker and the counterparty selling broker for the same trades. As the self- trades do not result in change of beneficial ownership and creates false and misleading appearance of trading in the market, it was alleged that the Noticee as a broker had not exercised due skill and care while dealing for its client, Majestic, in the market, thereby violating Clause A(2) of the Code of Conduct for Stock Brokers as specified under Schedule II read with Regulation 7 of SEBI(Stock Brokers and Sub-brokers)Regulations, 1992 (hereinafter referred to as Stock Brokers Regulations).
Page 3 of 21 5. A Show Cause Notice (SCN) was issued to the Noticee by the erstwhile AO on September 03, .2015. A brief background and the charges alleged in the SCN are as under.
Page 4 of 21 3 Nov. 2011 17 4 Dec. 2011 12 6.3. Such self-trades of Majestic where the Noticee acted as a broker and counterparty broker were executed on 24 trade days. 6.4. It was thus alleged that the Noticee by acting as broker and counterparty broker for self-trades for a total quantity of 10,718 shares through 38 trades on 24 trade days had not exercised due skill and care while dealing for its client, Majestic, and thus violated Clause A(2) of the Code of Conduct for Stock Brokers as specified under Schedule II read with Regulation 7 of SEBI (Stock Brokers and Sub-brokers) Regulations, 1992 which make the Noticee liable for monetary penalty under section 15HB of SEBI Act. REPLY TO THE SCN
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Source: SecMarx — sebi:AO/BJD/MAS/EAD/44/2017. 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.