sebi:MO/81/MIRSD/01/06

SEBI · SEBI · 2005-01-31 · 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

Warning issued to the broker; directed to be more cautious in future and adhere to SEBI Act provisions.

Provisions invoked

• s. 19
• s. 12

Regulations

• Reg. 13(4)
• Reg. 5(1)
• Reg. 13(2)

Parties

• M/s. SVV Share & Stock Brokers Pvt. Ltd.

Holding

The Whole Time Member warned M/s. SVV Share & Stock Brokers Pvt. Ltd. for various irregularities observed during inspection, including failure to maintain order book, discrepancies in contract notes, irregularities in client database, dealing with unregistered sub-broker, and granting trading terminals to clients, and directed it to be more cautious in future.

Full text

Home » Enforcement » Orders » Orders of Chairman/Members Enforcement Enforcement▼ ORDER UNDER REGULATION 13(4) OF SEBI (PROCEDURE FOR HOLDING ENQUIRY BY ENQUIRY OFFICER AND IMPOSING PENALTY) REGULATIONS, 2002, AGAINST M/S. SVV SHARE & STOCK BROKERS PVT. LTD., MEMBER, THE STOCK EXCHANGE, MUMBAI, SEBI REGISTRATION NO. INB010991632. 1.0             BACKGROUND

1.1 M/s. SVV Share and Stock Brokers Pvt. Ltd., (hereinafter referred to as “the broker”) is a member of The Stock Exchange, Mumbai (“BSE”) registered with SEBI as a stock broker under section 12 of SEBI Act, 1992 with SEBI Registration No. INB010991632. 1.2 Inspection of the books of accounts, documents and other records of the broker was carried out by SEBI for the period 2001-02 and 2002-03. During the inspection, 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 January 7, 2004 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 29.12.04 and recommended that a warning be issued to the broker. 2.2 A copy of the Enquiry Report was sent to the broker on 18.01.05, in terms of Regulation 13(2) of the said Regulations, advising him to show cause as to why appropriate penalty including the penalty recommended by the Enquiry Officer should not be imposed. 2.3 The broker replied vide letter dated 31.01.05 and stated that it will strictly follow the Rules, Regulations and Bye-laws of The Stock Exchange as well as the provisions of the SEBI Act, Rules and Regulations framed

3.0 CONSIDERATION OF ISSUES 3.1 I have carefully considered the findings of inspection, Enquiry and the submissions made by the broker and note the significant points as under; a) Whether the broker had failed to maintain order book It was alleged that the broker had not maintained order book. The broker stated that the orders were invariably and predominantly given by the clients on phone which were directly executed by the concerned operators sitting on the BOLT system. Hence all records would be available with the Exchange/SEBI. However, it had already started maintaining the order book as confirmed vide its letter dated July 9, 2003. EO finds that the general market practice is to place orders directly on the system of the Exchange and since the broker started maintaining the order book, a lenient view be taken. b) Whether there are discrepancies in the issuance of contract notes It is alleged that though the contract notes bear pre-printed serial numbers on an annual basis, the broking entity does not exercise any control over the continuity of the serial numbers on the contract notes. Instances were observed where the contract notes pertaining to one settlement on the basis of continuing pre-printed serial numbers were used for other settlements. Further the broker is not taking acknowledgement on the duplicate copy of the contract note but is maintaining a separate book for the said purpose. The acknowledgements do not carry date with them as a result it is not possibl

Source: SecMarx — sebi:MO/81/MIRSD/01/06. 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.