sebi:EAD/PM-AA/AO/39/2017-18

SEBI · SEBI · 2017-03-10 · Prasanta Mahapatra, Adjudicating Officer

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

Violation of Clause A(2) held established on one count and monetary penalty of Rs. 2,00,000 imposed under Section 15HB; IPV allegation not established.

Provisions invoked

• s. 15
• s. 15H
• s. 15I
• s. 15J
• s. 23

Regulations

• Reg. 9

Parties

• India Infoline Limited

Holding

India Infoline Limited violated Clause A(2) of the Code of Conduct by accepting orders in Ms. Vimala Devi Kalantri's account from Atul Saraogi without written authorization and is liable to Rs. 2,00,000 penalty under Section 15HB; no irregularity was found in conducting IPV at Mumbai.

Full text

Adjudication Order in respect of India Infoline Limited in the matter of United Spirits Ltd. Page 2 of 13 Kalantri based at Chennai was done at Mumbai, has failed in exercising due skill, care and diligence in the conduct of its business and thereby violated Clause A(2) of the Code of Conduct for Stock Brokers as specified under Schedule II read with Regulation 9 of SEBI (Stock Brokers and Sub Brokers) Regulations, 1992 (hereinafter referred to as ‘Broker Regulations, 1992’). APPOINTMENT OF ADJUDICATING OFFICER

Adjudication Order in respect of India Infoline Limited in the matter of United Spirits Ltd. Page 3 of 13 5. Vide letters dated September 04 & 29, 2017, Noticee requested for inspection of documents which was undertaken by Mr. Prasad Umarale and Ms. Mamta Singh, Authorised Representatives of the Noticee, on October 16 & 26, 2017 and copy of the documents requested by them were also provided. An opportunity of hearing post inspection of documents was granted to the Noticee on November 28, 2017 which was attended by Mr. Mohan Radhakrishnan, Mr. Prasad Ramakant Umarale, Mr. Somendra Agarwal and Mr. Narendra Jain on behalf of the noticee. A copy of Noticee’s reply dated November 24, 2017 was submitted during the course of hearing. They reiterated the submissions made in the reply to SCN and sought time to file additional written submissions in the matter. Additional written submissions were made by the Noticee vide letter dated December 08, 2017. The summary of submissions specific to the charges in the SCN are as follows:  Ms. Vimla Devi Kalantri was registered by India Infoline Limited on April 22, 2010 based on the documents submitted by the client including the KYC and account opening documents along with identity proof, address proof and bank account proofs etc and after due verification of the same in IT website, Prohibited/Debarred entities list as provided by SEBI/RBI/Government/Exchanges etc as in the normal course of due diligence verification and registration of the c

Adjudication Order in respect of India Infoline Limited in the matter of United Spirits Ltd. Page 4 of 13  We reiterate and confirm the fact that the IPV of the client was done by the Relationship Manager at our Mumbai office in April 19, 2010. It is also usual in our broking/DP service that the clients open their account at any of our branches of their choice and convenience and present and provide their registered address as per their identity proofs, permanent address, bank accounts, Pan Etc. which might belong to their original/ permanent/ current location. There are no prohibitory restrictions by SEBI/Exchanges on accepting the same and it all requires verification of such documents and IPV of the client. Accordingly, as a part of KYC verification, IIFL verifies the copies with the originals. Pan, Income Tax website etc. and then completes the registration. Accordingly in this case, the due diligence, document verification of identity, address, pan, bank account proofs etc and in-person verification of the client was carried out as per our system in April 2010 in Mumbai office when the client was personally present in Mumbai.  The client viz., Smt. Vimala Devi Kalantri had opened her account with IIFL through the Relationship Manager Mr. Vinay Jain on April 22, 2010. The client's trading account was opened after entering into the Member Client Agreement and also combined Risk Disclosure Document as prescribed by SEBI/Exchanges duly signed and accepted by the client. At

Source: SecMarx — sebi:EAD/PM-AA/AO/39/2017-18. 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.