sebi:EAD-8/JS/NS/02/2017
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Facts / Headnote
Penalty imposed
Provisions invoked
- s. 15
- s. 19
- s. 15H
- s. 15J
Regulations
- Reg. 6
- Reg. 9(f)
- Reg. 26
- Reg. 9
Parties
- M/s. Latin Manharlal Securities Pvt. Ltd.
Holding
The Noticee violated SEBI Circular No. SMD/SED/CIR/93/23321 dated November 18, 1993 by failing to maintain segregation between client funds and own funds and thereby failed to abide by the Code of Conduct read with Regulations 9(f), 26(xiii) and 26(xvi). The Noticee was held liable under Section 15HB of the SEBI Act, 1992 and a monetary penalty of Rs. 3,00,000 was imposed.
Full text
Page 2 of 8 (iii) Findings of the inspection were communicated to the Noticeevide SEBI letter dated February 4, 2015 enclosing a copy of the Inspection Report, encompassing the inspection findings along with the annexures for its comments. In response to the same, Noticeesubmitted its response on the findings of the inspection report vide its letter dated April 3, 2015 as well as replies / explanations to oral enquiry by SEBI seeking information on various issues, vide its letter dated July 21, 2015. Pursuant to the above, additional findings along with annexures, were communicated to the Noticeeby SEBI vide letter dated December 30, 2015. In response to the same, Noticeesubmitted its replies/ explanations vide letter dated January 12, 2016. Apart from the above, vide letter dated February 17, 2016, theNoticee submitted its replies / explanations in respect to the information sought by SEBI on issues, vide e-mail dated February 8, 2016.
Page 3 of 8 (ii) Noticee, vide email dated June 20, 2017 soughtan extension of one week to submit its reply to the SCN and the same was granted. Subsequently, vide letter dated July 28, 2017, Noticeereplied to the SCN and inter-aliasubmitted as under: a. Denied having violated any SEBI Circulars or Regulations; b. Referred to its reply provided vide letter dated January 12, 2016 and stated that the transfer of funds from Own Bank Account to Client Bank Accounts / Settlement Account sometimes becomes inevitable due to the following reasons: - At times client delays the payment. - To be recouped into the settlement account from own funds to ensure that it did not default on the Exchange. - Working Capital requirements on account of delayed payment from its debit clients. (iii) An opportunity of personal hearing was granted to the Noticeeon September 13,
Page 4 of 8 D. If so, what would be the quantum of monetary penalty that can be imposedon the Noticee after taking into consideration the factors mentioned in Section 15J of the SEBI Act, 1992? (ii) Before proceeding further, I would like to refer to the relevant provisions - Clauses A (1) (2) & (5) and B (3) of the Code of Conduct for Stock Brokers as specified in Schedule II read with Regulation 9(f), Regulation 26 (xiii) and Regulation (xvi) of the SEBI (Stock Brokers and Sub Brokers) Regulations, 1992 and SEBI Circular dated November 18, 1993, reproduced below:
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Source: SecMarx — sebi:EAD-8/JS/NS/02/2017. 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.