sebi:MO/16/MIRSD/06/04

SEBI · SEBI · 2002-05-10 · A K BATRA, 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

Certificate of registration suspended for six months

Provisions invoked

• s. 19
• s. 12

Regulations

• Reg. 4
• Reg. 7
• Reg. 13
• Reg. 6
• Reg. 17

Parties

• M/s Munjal Online Stock Access

Holding

The broker's certificate of registration INB200870116 was suspended for six months for failing to redress investor complaints, acting as a sub-broker without registration, and failing to comply with requirements regarding contract notes.

Full text

Page of 8 (Regulation) Rules, 1957 (hereinafter referred to as “SCRR”) and Regulation 17 of the SEBI (Stock brokers & Sub brokers) Regulations, 1992 (hereinafter referred to as the “Broker Regulations”). (c) The said broker had failed to redress investor grievances. (d) The said broker had not given access to the inspecting team to its registered office. 1.3 A copy of the inspection report was forwarded to the broker for his comments, on 25.1.2002. The said broker submitted his reply vide letter dated 10.5.2002. The response of the broker was found to be unsatisfactory. Hence, an enquiry officer was appointed, vide order dated 22.1.2003, to conduct an enquiry as per the provisions of SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 (hereinafter referred to as “Enquiry Regulations”). 2.0 ENQUIRY PROCEEDINGS 2.1 The Enquiry Officer issued a show cause notice to the said broker on 10.3.2003, under Regulation 6 of the Enquiry Regulations, delineating the violations alleged to have been committed by them and advised them to show cause as to why appropriate penalty should not be levied on them for the said violations. An opportunity of personal hearing before the Enquiry Officer was also offered. Shri Sanjay Munjal, Director of the said broker, appeared before the Enquiry Officer on 26.5.2003 and sought further time to make submissions. Accordingly, another hearing was granted before the Enquiry Officer on 9.6.2003.

Page of 8 2.2 The Enquiry Officer, after considering the submissions made by the said broker, submitted her report on 10.7.2003, with the recommendation that a major penalty of suspension of certificate of registration for a period of 6 months may be imposed on the broker. In her report, the Enquiry Officer has found that the following violations/irregularities were committed by the said broker: i. Non-maintenance of books of accounts other than “All ledger Accounts”. ii. Non-maintenance of copies or counterfoils of contract notes / confirmation memos issued to clients. iii. Non-redressal of investor grievances. iv. Dealing as sub broker, without obtaining registration as such. 3.0 SHOW CAUSE NOTICE AND PERSONAL HEARING 3.1 A show cause notice dated 29.7.2003 was issued to the said broker, advising them to show cause as to why appropriate penalty, including

Page of 8 securities, even though they were not even trading at OTCEI. The enquiry officer had inferred from the above that these books should have been maintained individually. There is no such mention in Rule 15 of SCRR and Regulation 17 and 18 of SEBI Broker Regulations and on the basis of this enquiry officer had gone on to state that they had violated code of conduct as well. (b) They had tried to explain to the enquiry officer that they were not operating on OTCEI as dealers nor were they dealing in any transaction, so there was no need to maintain any contract notes or counterfoils. (c) It was obvious that they had in fact redressed the complaint of R.C. Sardana to the best of their ability and offered to pay him what was not even due to him. (d) They had not dealt with / as unregistered sub broker or broker. They were registered with OTCEI, LRM Securities Ltd was member of the DSE and Munjal Leasing Ltd was a member of NSE, all duly registered with SEBI. 3.3 An opportunity of personal hearing was granted to the said broker on 18.11.2003. On the said date, the said broker appeared before me and made submissions. Further to the said hearing, the said broker also furnished written submissions on 30.11.2003. 4.0 CONSIDERATION OF ISSUES

Source: SecMarx — sebi:MO/16/MIRSD/06/04. 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.