sebi:EAD-8/JS/NS/59/2017

SEBI · SEBI · 2017-08-18 · Jeevan Sonparote, Adjudicating Officer

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Facts / Headnote

Penalty of Rs 2,50,000 imposed under Section 15HB of the SEBI Act, 1992

Provisions invoked

• s. 15
• s. 19
• s. 15H
• s. 15J

Regulations

• Reg. 6
• Reg. 9(f)
• Reg. 26
• Reg. 9

Parties

• M/s. Capstocks and Securities India Pvt. Ltd.

Holding

The Noticee violated SEBI Master Circular dated January 02, 2012 and Circular dated August 10, 2011 and Clauses A(2) and A(5) of the Code of Conduct by short/non-collection of client margins. It was held liable for monetary penalty under Section 15HB and a penalty of Rs 2,50,000 was imposed.

Full text

Adjudication Order in the matter of M/s. Capstocks and Securities India Pvt. Ltd. Page 2 of 17 letter dated August 18, 2017, CSIPL replied to the SCN and refuted the alleged violations and also sought a personal hearing in the matter. (iv) Vide Notice dated September 5, 2017, an opportunity for personal hearing was granted to CSIPL on September 19, 2017. Pursuant to the submission made during hearing, CSIPL undertook to make further written submission by October 10, 2017. Thereafter, vide its letters dated October 10, 2017 and November 28, 2017, CSIPL submitted additional written submissions.

Adjudication Order in the matter of M/s. Capstocks and Securities India Pvt. Ltd. Page 3 of 17 a. Denied having violated the alleged violations, contentions and statements made in the SCN and submitted that the charges mentioned therein were basically related to procedural and technical lapses and did not pertain to the intent or act of manipulating the market and thereby causing harm to innocent investors.; b. Referred to its earlier reply provided vide letter dated February 3, 2015 inter-alia stating as below: - Regarding Short collection of margin / non-collection of margin, in accordance with NSE circular dated December 14, 2011 Ref.: NSE/INSP/19583, shortage in margin for most of the cases was covered by the shares held by the respective clients in their depository participant accounts and / or the payout against the sale of shares in the said account. During FY2012-13 and FY2013-14 only 12 and 13 clients respectively had shortage in margins. While the shortfall in all cases was reported to the Stock Exchanges, there was no instance of non-reporting or wrong reporting to the Stock Exchange. - Enhancement of margins in respect of cheques received/ recorded in the books of trading member on or before T day, deposited by T + 1 day, and cleared subsequently, was in compliance / in accordance with the NSE circular dated October 23, 2013 Ref.: NSE/ INSP/24805 regarding the margin required to be collected by the clients. Further, in case of dishonor of cheques received from the

Adjudication Order in the matter of M/s. Capstocks and Securities India Pvt. Ltd. Page 4 of 17 of Conduct for Stock Brokers as stipulated in Schedule II of the SEBI (Stock- Brokers And Sub-Brokers) Regulations, 1992 liable for penalty under Regulation 26 (xx) of SEBI (Stock-Brokers And Sub-Brokers) Regulations, 1992; B. Whether the Noticee is liable for monetary penalty under Section 15HB of the SEBI Act, 1992?

Source: SecMarx — sebi:EAD-8/JS/NS/59/2017. 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.