sebi:MO/82/MIRSD/01/06

SEBI · SEBI · 2004-10-04 · 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 with direction to be more cautious in future

Provisions invoked

• s. 19
• s. 12

Regulations

• Reg. 13(4)
• Reg. 5(1)
• Reg. 13(2)

Parties

• M/s. Master Capital Services Ltd.

Holding

The Whole Time Member warned M/s. Master Capital Services Ltd., member of NSE, and directed it to be more cautious and adhere to the SEBI Act and Rules and Regulations thereunder.

Full text

Home » Enforcement » Orders » Orders of Chairman/Members Enforcement Enforcement▼ Order against Master Capital Services Ltd Jan 06, 2006 | Orders : Orders of Chairman/Members MO/82/MIRSD/01/06 SECURITIES AND EXCHANGE BOARD OF INDIA

1.1 M/s. Master Capital Services 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. INB230643634. 1.2 Inspection of the books of accounts, documents and other records of the broker was carried out by SEBI for the period April 1, 2001 to December 31, 2003 and certain irregularities were observed. 2.0 ENQUIRY PROCEEDINGS 2.1 In view of the above, an Enquiry Officer (EO) was appointed vide SEBI Order dated March 4, 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 10.09.04 and recommended that a warning be issued to the broker. 2.2 A copy of the Enquiry Report was sent to the broker on 15.09.04, 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 04.10.04 and stated that they were of the belief that their Routine Listing was not an advertisement. Secondly, as soon as the Inspection team raised the point, they have sent copy to NSE to prove their bonafide that they have no intention t

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 significant points as under; a) Whether the broker has indulged in off-market trades It has been alleged that the broker had indulged in certain off market trades which were observed in ALBM segment where, as informed, the member had done the trades with the consent of the clients at the prevailing market prices. The broker submitted that the trades mentioned were not off market trades but merely entries done at the request of the clients – one who desired to rollover the long position to the next settlement and the other willing to finance the rollover of long position. As the clients were not in a position to take delivery of the shares and the broker could not do any fund based activity, they had other clients who were willing to extend finance. On receiving their consent, the entries were recorded and got reflected in the books of MCSL. Since these entries were of memorandum nature only and done purely with a view to facilitate the requirement and supply of finance, no correspondent delivery of shares has been given/taken by any of the clients. The entries were done at the closing market rates. The confirmatory consents of clients were taken and copies of these consents have already been submitted. The broker has further relied on the order of The Hon’ble Member SEBI in the matter of M/s. JM Morgan Stanley Retail Services Pvt. Ltd

Source: SecMarx — sebi:MO/82/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.