sebi:AO/SM-LS/ERO/13/2016

SEBI · SEBI · 2015-06-22 · S Madhusudhanan, Adjudicating Officer

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Facts / Headnote

Penalty of Rs. 1,50,000 imposed on the Noticee under Section 15HB of the SEBI Act for failure to obtain SCORES authentication

Provisions invoked

• s. 15
• s. 15H
• s. 15J

Holding

The Noticee was found to have violated SEBI Circulars requiring SCORES authentication and was liable for a monetary penalty under Section 15HB of the SEBI Act. A penalty of Rs. 1,50,000 was imposed, taking into account mitigating factors under Section 15J.

Full text

Page 2 of 5 transfer of Shri S V Krishanmohan, the undersigned was appointed as Adjudicating Officer vide Order dated June 22, 2015. SHOW CAUSE NOTICE, REPLY AND PERSONAL HEARING

Page 3 of 5 CONSIDERATION OF ISSUES AND FINDINGS 8. I have examined the SCN, the reply and the submissions of the Noticee, and other information and documents available on record. The issues that arise for consideration in the present case are : a) Whether the Noticee by failing to obtain SCORES authentication has failed to comply with SEBI Circular No. CIR/OIAE/1/2012 dated August 13, 2012 and CIR/OIAE/1/2013 dated April 17, 2013? b) Does the violation, if any, on the part of the Noticee attract monetary penalty under Section 15 HB of the SEBI Act? c) If so, what would be the monetary penalty that can be imposed taking into consideration the factors mentioned in Section 15J of the SEBI Act?

Page 4 of 5 14. In this regard, it is pertinent to note that the Hon’ble Securities Appellate Tribunal in the matter of Port Shipping Company Ltd. Vs. Securities and Exchange Board of India has held that :- “Under Section 15HB, penalty imposable for non compliance of SEBI direction is not less than one lakh rupees but may extend to one crore rupees. In the present case, after considering all mitigating factors the adjudicating officer of SEBI has imposed penalty of Rs. 1,50,000/- as against penalty of Rs. 1 crore imposable under Section 15HB of SEBI Act which cannot be said to be excessive or unreasonable. Argument of the appellant that there was no operating income, no permanent employee, no pending investor grievance, no prejudice caused to any investor and that the shares of the appellant company were not traded for more than six years, cannot be a ground to disobey the directions given by SEBI. Obligation to obtain SCORES authentication was not dependent on there being operating income or pending investor grievance or trading of shares on the stock exchanges. Admittedly, the appellant company continues to be a listed company and, therefore, it was obligatory on part of appellant company to obtain SCORES authentication within the time stipulated by SEBI. However, the appellant has consistently failed and neglected to comply with the directions of SEBI and it is only when SEBI initiated penalty proceedings, the appellant chose to comply with the

Source: SecMarx — sebi:AO/SM-LS/ERO/13/2016. 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.