sebi:MO/186/MIRSD/02/2006

SEBI · SEBI · 2005-06-07 · 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 imposed on the broker

Provisions invoked

• s. 19
• s. 12

Regulations

• Reg. 13(4)
• Reg. 5(1)
• Reg. 13(2)
• Reg. 200

Parties

• Steel City Securities Limited

Holding

SEBI censured Steel City Securities Limited for delay in making payment/delivery of securities to clients and for violating the bye-laws of the stock exchange with regard to issue of advertisement. The allegations of deficiencies in contract notes and dealing with unregistered sub-broker were not made out.

Full text

Home » Enforcement » Orders » Orders of Chairman/Members Enforcement Enforcement▼ Order Against Steel City Securities Limited Feb 02, 2006 | Orders : Orders of Chairman/Members MO/186/MIRSD/02/2006 SECURITIES AND EXCHANGE BOARD OF INDIA

1.0 BACKGROUND 1.1 M/s. Steel City Securities Ltd. (hereinafter referred to as “the broker”) is a member of National Stock Exchange, (“NSE”) registered with SEBI as a stock broker under section 12 of SEBI Act, 1992 with SEBI Registration No. INB230806132. 1.2 Inspection of the books of accounts, documents and other records of the broker was carried out by SEBI 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 vide SEBI Order dated December 16, 2003 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 29.04.05 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 18.05.05, 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 07.06.05 and submitted that in view of the EO having given the benefit of doubt and having accepted the submissions and explanations of the broker in respect of the alleged violations, there are no grounds for le

3.0 CONSIDERATION OF ISSUES 3.1 I have carefully considered the findings of inspection, Enquiry and the submissions made by the broker and my observations are as follows : a) Delay in making payment/delivery of securities to clients It has been alleged that there was a delay in making payment as well as delivery of securities. The broker replied that it had verified all the cases and found that the delay in all the instances was due to a delay in completion of the pay-in obligation by the client concerned and the securities were delivered after completion of the due pay-in obligation by the client. The EO found that the broker itself has admitted that there was a delay and hence is guilty of the violation. b) Violation of the bye-laws of the stock exchange It has been alleged that the member failed to follow the bye-laws of the stock exchange with regard to issue of advertisement. The broker submitted that seven such instances were observed in the inspection report and out of these, three were for inserting telephone numbers. The other four cases were in the nature of donations for Souvenirs and not for soliciting business. The same were paid by the broker under compulsion because of some official pressures. The EO observed that a prudent broker has to follow the rules and regulations strictly. The EO found that the donations claimed to have been given by the broker were in return for publicity in the souvenir being published. It is clear from the bye-laws that no advertiseme

Source: SecMarx — sebi:MO/186/MIRSD/02/2006. 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.