sebi:BM/AO-52/2012
Facts / Headnote
Penalty imposed
Provisions invoked
- s. 15
- s. 15J
Regulations
- Reg. 7
- Reg. 199
- Reg. 23
Holding
The Noticee violated SEBI's Circular SEBI/MRD/SE/Cir-33/2003/27/08 dated August 27, 2003 and Clause A(2) and A(5) of Schedule II prescribed under Regulation 7 of the Broker Regulations by accepting third party payments, and is liable for a monetary penalty of Rs.5,00,000 under Section 15HB of the SEBI Act, 1992.
Full text
Page 2 of 11 2. In view of the above it was alleged that the broker violated Clause A (2) and A (5) of Schedule II prescribed under Regulation 7 of SEBI (Stock Broker and Sub-Broker) Regulations 1992 (hereinafter referred to as the 'Broker Regulations') and SEBI’s Circular SEBI/MRD/SE/Cir-33/2003/27/08 dated August 27, 2003 (hereinafter referred to as 'the Circular'). Consequently, the above violation makes Noticee liable for monetary penalty under Section 15 HB of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as 'SEBI Act').
Page 3 of 11 advised to submit details of the source of funds received by it on behalf of its clients in certain instances, along with documentary evidence for the same. Subsequently, vide a letter dated August 27, 2012, the Noticee conveyed its inability to attend the personal hearing and once again requested that the same be adjourned. Thereafter, in the interest of natural justice, vide hearing notice dated September 4, 2012, a final opportunity for personal hearing was granted to the Noticee on September 20, 2012. The Noticee appeared for the hearing on the scheduled date, and made submissions before me. The Noticee also submitted its Bank Account Statements pertaining to the investigation period. At the time of the hearing, the Noticee was advised to submit its online bank statement for the dates on which the alleged third party payments were accepted by it. The Noticee submitted the same for October 10, 2008 and June 23, 2009 as it had availed online banking facility only post September 15, 2008. Noticee also submitted further details of the payments received by it vide its letter dated September 25, 2012. The submissions of the Noticee, are summarized below:
Page 4 of 11 7. Therefore, the issues that arise for consideration in the present case are : a. Whether the Noticee violated SEBI’s Circular SEBI/MRD/SE/Cir- 33/2003/27/08 dated August 27, 2003? b. Whether the Noticee violated Clause A (2) and A (5) of Schedule II prescribed under Regulation 7 of the Broker Regulations? c. Do the above alleged violations, if any, on the part of the Noticee attract monetary penalty under Section 15 HB of the SEBI Act? d. If so, what would be the monetary penalty that can be imposed taking into consideration the factors mentioned in Section 15J of SEBI Act?
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Source: SecMarx — sebi:BM/AO-52/2012. 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.