sebi:MO/42/MIRSD/12/03
Facts / Headnote
Certificate of registration of M/s D. Agarwal & Co. suspended for a period of one month, effective after 3 weeks from the date of the order.
Provisions invoked
- s. 19
- s. 12
Regulations relied on
- SEBI (Enquiry & Penalty) Regulations, 2002
- SEBI (Stock Brokers) Regulations, 1992
Parties
- M/s D. Agarwal & Co.
Holding
The Whole Time Member suspended the certificate of registration of M/s D. Agarwal & Co. for one month for violations including irregular contract notes, non-segregation of client funds, dealing as an unregistered sub-broker, non-maintenance of client database, principal-to-principal transactions, and off-the-floor/cross deals.
Full text
member was also asked to intimate along with the reply whether it desired a personal hearing. The member vide letter dated 19.08.2003 replied to the show cause notice dated 29.07.2003. The member made the following submissions: (a) That as per the guidelines of SEBI, a Stock Broker cannot do any other business other than securities business. In case registration is suspended for one month, it would be left with no source of Income during the said period and would be deprived off its right to cash. (b) That since it has already started complying with all the violations observed by SEBI Inspection team, the member requested to take a lenient view. The member did not seek any personal hearing while submitting as above.
Section 12 of the SEBI Act specifies as under: 12. (1) No stock-broker, sub- broker, share transfer agent, banker to an issue, trustee of trust deed, registrar to an issue, merchant banker, underwriter, portfolio manager, investment adviser and such other intermediary who may be associated with securities market shall buy, sell or deal in securities except under, and in accordance with, the conditions of a certificate of registration obtained from the Board in accordance with the regulations made under this Act.
member is following a system which lacks transparency where the investor is not sure that the order is executed at the best possible price and therefore the member by not issuing the contract note in the appropriate form i.e. Form A violated directives issued by SEBI vide Circular No. SMD(B)/104/22775/93 dated 29.10.93 as well as provisions of Clause A(5) of Code of Conduct as specified in Schedule II read with Regulation 7 of SEBI (Stock brokers & Sub brokers ) Regulations, 1992. 6.6 Regarding conducting of off the floor transaction by the member, I find that the total turnover (in crores) of the member during the year 1999-2000 and 2000-2001 is as follows: From the Enquiry Report, I find that the member entered into the following cross deals:
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Source: SecMarx — sebi:MO/42/MIRSD/12/03. 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.