sebi:CO/67/SMD/06/2003

SEBI · SEBI · G.N. Bajpai, Chairman, Securities and Exchange Board of India

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Facts / Headnote

Broker held guilty of multiple violations; charges of delay in payment/delivery (except Ms. Jasbir Kaur instance), turnover fees, cross deal, and margin non-collection dropped or not pursued; broker held liable for violations of Code of Conduct clauses A(5) and B(1), Rule 4(b), Rule 15(1)(g), Regulation 17(1)(g), LSE Bye-laws and SEBI circulars

Provisions invoked

Regulations

Parties

Holding

The broker NLM Capital Services Limited was held guilty of violating the Code of Conduct (clauses A(5) and B(1)), Rule 4(b), Rule 15(1)(g) of the SC(R) Rules, Regulation 17(1)(g), LSE Bye-laws and SEBI circulars, including dealing with unregistered sub-brokers, non-maintenance of client database, and use of rubber-stamped serial numbers on contract notes. Several charges including delay in payments/deliveries (except Ms. Jasbir Kaur), turnover fees, cross deal, and margin non-collection were dropped or not pursued.

Full text

Home » Enforcement » Orders » Orders of Chairman/Members Enforcement Enforcement▼ ORDER UNDER REGULATION 23 OF SEBI (STOCK BROKERS AND SUB-BROKERS) REGULATIONS, 1992 READ WITH REGULATION 13(4) OF SEBI (PROCEDURE FOR HOLDING ENQUIRY BY ENQUIRY OFFICER AND IMPOSING PENALTY) REGULATIONS,2002 IN the matter of M/S NLM Capital Services Limited. 1.0 M/S NLM Capital Services Limited. (hereinafter referred to as ‘the said broker’) is registered with Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’) as a broker - SEBI Registration no. INB 12756135 and is a member of the Ludhiana Stock Exchange Association of India Limited (hereinafter referred to as ‘the LSE’). 1.1 During inspection of the books of account, records and other documents of the said broker undertaken by SEBI during January 2001 under Regulation 19(1) of the SEBI(Stock Br and Sub Brokers) Regulations, 1992 (hereinafter referred to as ‘ the said Regulations’) following violations were observed :- 1.Transactions had been carried out in other exchanges through members, without being registered as sub-broker, which is in violation of Section 12 of the SEBI Act, 1992, Rule 3 of SEBI (Stock Brokers &Sub-Brokers) Rules, 1992 (hereinafter referred to as the "Rules") and SEBI Circular SMD/Policy/Cir-3/98 dated 16 January, 1998.

ORDER UNDER REGULATION 23 OF SEBI (STOCK BROKERS AND SUB-BROKERS) REGULATIONS, 1992 READ WITH REGULATION 13(4) OF SEBI (PROCEDURE FOR HOLDING ENQUIRY BY ENQUIRY OFFICER AND IMPOSING PENALTY) REGULATIONS,2002 IN the matter of M/S NLM Capital Services Limited. 1.0 M/S NLM Capital Services Limited. (hereinafter referred to as ‘the said broker’) is registered with Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’) as a stock- broker - SEBI Registration no. INB 12756135 and is a member of the Ludhiana Stock Exchange Association of India Limited (hereinafter referred to as ‘the LSE’). 1.1 During inspection of the books of account, records and other documents of the said broker undertaken by SEBI during January 2001 under Regulation 19(1) of the SEBI(Stock Brokers and Sub Brokers) Regulations, 1992 (hereinafter referred to as ‘ the said Regulations’) following violations were observed :- 1.Transactions had been carried out in other exchanges through members, without being registered as sub-broker, which is in violation of Section 12 of the SEBI Act, 1992, Rule 3 of SEBI (Stock Brokers &Sub-Brokers) Rules, 1992 (hereinafter referred to as the "Rules") and SEBI Circular SMD/ Policy/Cir-3/98 dated 16th January, 1998. Document Register maintained did not contain particulars of distinctive numbers which is in violation of Rule 15(1)(g) of Securities Contracts (Regulation) Rules, 1957 and Regulation 17(1)(g) of the said Regulations. Turnover fees, as prescribed has

It is, therefore, concluded that in respect of these transactions on NSE, the member had acted as unregistered sub broker of SG Stock Services Ltd., NSE, which is in vio Section 12 of SEBI Act, Rule 3 of the said Rules and SEBI Cir SMD/POLICY/CIR-3/98 dated 16/01/1998. 4.2. Non maintenance of document register As the regards the charge that the member did not maintain document register with particulars of distinctive numbers, it was replied that majority of the deals are in the dem and complete details of distinctive numbers are mentioned in the bills relating to such transactions. Even if the member is mentioning the details of distinctive numbers of t on the bill, he is nevertheless required to enter the same in the document register to be maintained for the purpose. Document register is one of the statutory books that have to be mandatorily maintained as per Rule 15(1)(g) of Securities Contracts (Regulation) Rules, 1957, and Regula 1(g) of the said Regulations. However, the fact that the distinctive number of the scrips were mentioned on the bills may be taken as the mitigating factor. 4.3. Turnover fees As regards non payment of turnover fees for the years 1995-1996, it was submitted that earlier it was a sole proprietorship firm which was later on converted into a corpora in the year 1995 in the name of NLM Capital Services Ltd. It was further submitted that they have paid Rs.81,605 as fees to SEBI between 1992 and 1998. Rs.5000 was 28/9/2000 and the balance to be paid w

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Source: SecMarx — sebi:CO/67/SMD/06/2003. 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.