sebi:MO/15/MIRSD/05/06

SEBI · SEBI · 2002-10-03 · Whole Time Member, Securities and Exchange Board of India

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Facts / Headnote

Suspension of certificate of registration for a period of six months, effective on expiry of 21 days from the date of order

Provisions invoked

• s. 19
• s. 12(1)
• s. 12

Regulations

• Reg. 7
• Reg. 199
• Reg. 13(4)
• Reg. 5(1)
• Reg. 13(2)
• Reg. 6
• Reg. 18A
• Reg. 19(1)
• Reg. 7(B)(2)

Parties

• M/s Esha Securities Ltd.

Holding

In exercise of powers under Section 19 of SEBI Act, 1992 read with Regulation 13(4) of the said Regulations, SEBI imposed a major penalty of suspension of certificate of registration for six months on M/s Esha Securities Ltd. (INB050719038), member Delhi Stock Exchange. The order shall come into effect on expiry of 21 days from the date of the order.

Full text

Home » Enforcement » Orders » Orders of Chairman/Members Enforcement Enforcement▼ Order against M/s. Esha Securities Ltd May 30, 2006 | Orders : Orders of Chairman/Members MO/15/MIRSD/05/06 SECURITIES AND EXCHANGE BOARD OF INDIA

1.1 M/s Esha Securities Limited (hereinafter referred to as the ‘broker’) is a member of the Delhi Stock Exchange (hereinafter referred to as ‘DSE’) and is registered with the Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’) as a Stock broker under Section 12 of SEBI Act, 1992 with Registration Number INB050719038. 1.2 An Inspection of the Books of Accounts, documents and other records maintained by the broker for the period 1.4.2000 to 30.11.2002 was carried out by M/s. G. Jai & Associates, Chartered Accountants appointed by SEBI vide Order dated October 3, 2002 under Regulation 19(1) of the SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992. 1.3 During the Inspection, certain irregularities committed by the broker were observed. 2.0 APPOINTEMENT OF ENQUIRY OFFICER 2.1 Inspection Report was forwarded to the broker on completion of inspection. After considering its reply, an Enquiry Officer was appointed vide order dated January 3, 2004 under Regulation 5(1) of SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 (hereinafter referred as the ‘said regulations’) to enquire into the alleged irregularities committed by the broker which were observed during the inspection. 2.2 A Notice dated March 23, 2004 was issued to the broker under Regulation 6 (1) of the said regulations. The broker replied to the notice vide its letter dated May 11, 2004 and sought a personal hearing. The broker was granted hearing bef

5.19  Enquiry Officer found  that shares were sold from trading account to some fictitious clients with whom settlement of funds had been made in cash and deliveries had not bee to such clients. The broker submitted that there was no fictitious transaction. Cash received from clients was duly deposited in the client account on a periodical basis an deliveries were given to the clients. Considering the value of shares involved  i.e. Rs.58 lacs and lack of evidence to support broker’s submissions that deliveries were clients and failure to establish the antecedents of the clients, I am of the view that there is reasonable suspicion of broker’s involvement in trading in the names of fictitiou as found by the Enquiry Officer in his report. Therefore, the conduct of the broker is in contravention of code of conduct under SEBI (Stock Brokers and Sub brokers) Reg 1992. 5.20 Enquiry Officer found that the broker made changes in the dominant and non-dominant group share holding pattern and changes in the constitution of Board of Directors with prior approval of the exchange. Further, the broker did not even intimate the exchange regarding the said changes. However, the broker submitted that the change in share pattern was within the permissible limits of the exchange and was intimated to the exchange. I have perused the evidence submitted by the broker and I find that vide lett July 19, 2003 the broker had intimated DSE about the change in the share holding pattern. In the said letter

Source: SecMarx — sebi:MO/15/MIRSD/05/06. 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.