sebi:MO/112/MIRSD/01/06

SEBI · SEBI · 2004-12-15 · Madhukar, Whole Time Member

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

Facts / Headnote

Censure

Provisions invoked

• s. 19
• s. 12

Regulations

• Reg. 13(4)
• Reg. 5(1)
• Reg. 13(2)

Parties

• Mangal Keshav Securities Ltd.

Holding

The Whole Time Member imposed the minor penalty of censure on M/s. Mangal Keshav Securities Ltd., member of BSE and NSE, agreeing with the Enquiry Officer on four violations. The order was to come into force with immediate effect.

Full text

Home » Enforcement » Orders » Orders of Chairman/Members Enforcement Enforcement▼ Order against Mangal Keshav Securities Ltd Jan 13, 2006 | Orders : Orders of Chairman/Members MO/112/MIRSD/01/06 SECURITIES AND EXCHANGE BOARD OF INDIA

1.0 BACKGROUND 1.1 M/s. Mangal Keshav Securities Ltd., (hereinafter referred to as “the broker”) is a member of The Stock Exchange, Mumbai (“BSE”) and National Stock Exchange (NSE) registered with SEBI as a stock broker under section 12 of SEBI Act, 1992 with SEBI Registration No. INB010977431 and INB230977432. 1.2 Inspection of the books of accounts, documents and other records of the broker was carried out by SEBI for the period 2003-04 and certain irregularities found to have been committed by the broker were observed. 2.0 ENQUIRY PROCEEDINGS 2.1 In view of the above, an Enquiry Officer (EO) was appointed under Regulation 5(1) of SEBI (Procedure for Holding Enquiry) Regulations, 2002 (hereinafter referred to as the “said Regulations”) to inquire into the irregularities observed during the inspection of books of accounts of the broker. The EO after conducting the enquiry in terms of the said regulations submitted his report on 18.11.04 recommending for imposition of a minor penalty of censure on the broker. 2.2 A copy of the Enquiry Report was sent to the broker on 25.11.04, in terms of Regulation 13(2) of the said Regulations, advising it to show cause as to why appropriate penalty including the penalty as recommended by the Enquiry Officer should not be imposed. 2.3 The broker replied vide letter dated 15.12.04. The broker submitted that it has been carrying on the activities as market intermediary since the last 65 years with due diligence, fairness and in accordance wit

purely technical and procedural lapses having no adverse impact on the interest of investor or functioning of the securities market and therefore no penalty is warranted. 3.0 CONSIDERATION OF ISSUES 3.1 I have carefully considered the findings of inspection, Enquiry and the submissions made by the broker. Though the inspection report lists a number of violations alleged to have been committed by the broker, the EO has found the broker guilty of only four violations. I have noted the significant points as under: a) Irregularities at BSE i) Dealing with unregistered sub-broker It has been alleged that Olympia Securities Services (OSS) had acted as unregistered sub-broker of the broker. The broker submitted that the allegation did not arise from the inspection report of the auditor and that associate concern of OSS was a registered member of NSE and OSS itself was a registered sub-broker of BSE through Pioneer Intermediaries Ltd. The broker submitted that OSS was initially registered as a client to execute its proprietary trades and subsequently it became a registered sub-broker of the broker w.e.f 3.1.01. The EO found that pay-in and pay- out obligations were received from and delivered to as many as 101 DP IDs which goes to show that OSS was not merely executing proprietary trades but was also trading for the ultimate clients through the broker. As these trades were executed prior to 3.1.01 i.e. before OSS became a registered sub-broker, the EO found that the action of the bro

Source: SecMarx — sebi:MO/112/MIRSD/01/06. 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.