sebi:MO/202/MIRSD/02/2006

SEBI · SEBI · 2004-12-16 · Madhukar, Whole Time Member

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Facts / Headnote

Show cause notice disposed of without supercession of the Governing Board; directions issued to submit a compliance report within three months on remaining deficiencies.

Provisions invoked

• s. 11
• s. 19
• s. 12A
• s. 4B
• s. 149

Parties

• Cochin Stock Exchange Ltd. (CoSE)

Holding

The Whole Time Member declined to order supercession of the Governing Board of Cochin Stock Exchange Ltd. under Section 11 of SCRA, finding the remaining deficiencies not serious enough, and instead directed the Governing Board to submit a compliance report within three months on the outstanding observations regarding recovery of dues/shortfall in BMC and inadequate infrastructure facilities.

Full text

Home » Enforcement » Orders » Orders of Chairman/Members Enforcement Enforcement▼ Order against Cochin Stock Exchange Ltd Feb 02, 2006 | Orders : Orders of Chairman/Members MO/202/MIRSD/02/2006 SECURITIES AND EXCHANGE BOARD OF INDIA

2.8 With regard to the allegation of non recovery of sub broker registration fee dues, CoSE while reiterating its earlier stand taken as per its compliance report, submitted that out of the 23 brokers w brokers had SEBI registration fee dues, 5 brokers have cleared their total dues and the exchange is pursuing the matter for clearance of the remaining cases. 2.9. On the allegation of non maintaining of capital adequacy norms, CoSE ,reiterating the same reply as given by it in its compliance report, submitted that the Base Minimum Capital (BMC) no been complied with and the members who have not maintained the stipulated minimum BMC have been suspended from membership w.e.f. from August 31, 2004. 2.10 With regard to the allegation of transfer of membership without collecting dues of the exchange, CoSE submitted that the exchange has completely stopped the practice of transfer of BMC transferor to the transferee. No transfers are being effected, without clearance of the dues. The transfers are also being effected only after getting the prior approval from SEBI. 2.11 On the issue of absence of leave and license agreement with the subsidiary for leasing office space, CoSE submitted that in view of the objection raised in the Inspection Report, renewal of t agreement was kept pending and shall be executed on getting SEBI’s approval for which a separate request was submitted. However, CoSE has subsequently confirmed that it has entered in agreement on August 31, 2005. 2.12 With rega

f) It failed to recover dues from the members and impose fines/penalties for non payment/late payment. g) CoSE enhanced its share value without proper consent from members. h) It diversified its activities into the field of education without following proper procedure. i) CoSE was functioning without proper/adequate infrastructure. 1.5 During the inspection of CoSE, it was also observed that the Exchange did not take effective preventive steps and the general functioning and administration of the Exchange had not been carried out as per the provisions of SCRA and SCRR. 1.6 It was also observed that various circulars / directives / instructions issued by SEBI under the provision of SEBI Act, 1992, was not complied with by the Exchange. 2.0 SHOW CAUSE NOTICE AND ITS REPLY 2.1 On the basis of the aforesaid findings a detailed show cause notice dated June 06, 2005 was issued to the Governing Board of CoSE under Section 11 of Securities Contracts (Regulation) Act, 1956 (hereinafter referred to as SCRA). Vide said show cause notice, while referring to the observations made in the inspection report which were not complied by CoSE, the Governing Board of CoSE was called upon to show cause as to why appropriate action including supercession of the Governing Board of CoSE under Section 11 of SCRA should not be taken against it in light of the aforesaid observations made in the inspection report. 2.2 CoSE vide its letter dated June 21, 2005 replied to the show cause notice wherein while

Source: SecMarx — sebi:MO/202/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.