sebi:EAD-5/BS/AO/101/2017-18
This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.
Provisions invoked
- s. 15
- s. 15H
- s. 15J
Regulations
- Reg. 9
Parties
- IGSL (stock broker)
Holding
The Noticee (stock broker) was found to have failed in its duty to ensure its trading terminals were not used for self-trades and order book manipulation by its client, attracting monetary penalty for violations of the Code of Conduct for Stock Brokers.
Full text
Page 2 of 29 APPOINTMENT OF ADJUDICATING OFFICER 2. Initially SEBI appointed Shri S.V. Krishnamohan as the Adjudicating Officer (AO) vide order dated November 05, 2015. Subsequently, the undersigned was appointed as the Adjudicating Officer vide order dated September 15, 2017 to inquire into and adjudge under Section 15HB of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as “SEBI Act”), the violations alleged to have been committed by the Noticee.
Page 3 of 29 Further, client had traded in highly liquid stock of Exchange wherein number of market participants are carrying on trades. Since trades were carried out in highly liquid stock of Exchange, no single client can manipulate various parameters like price, quantity, etc as alleged in SCN. Trades were carried out by the said client was purely based on price movement in IOB and arbitrage opportunities prevailing in both the segments of the Exchange. The said client was trading through us for long time. He was trading in Cash and F&O segments of the Exchanges. His trading style was more of intraday trading in nature. He was regularly fulfilling his obligations with respect to his trading. We do not find any suspicious in his trading. During any trading day being a stock broker, we are witnessing more than 10000 trades carried out by more than 700 clients in more than 550 securities. We do not find any suspicious as client was entering trades in blue chip stock of the nation. It is difficult to know the intention of any client while entering trades during live market in good companies like IOB. With regard to self-trade query it is very much possible wherein trades were carried out in arbitrage nature. We being a stock broker had exercised sufficient due skill and care with respect to trades under question in SCN.
Page 4 of 29 Trades for the client were stopped after December 26, 2013 when it was found that these transactions were not desirable. The Client and his family members are regular clients and due process of KYC was followed. Self-Trades could not be stopped earlier but due to advancement of technology now it is possible to stop.
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Source: SecMarx — sebi:EAD-5/BS/AO/101/2017-18. 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.