sebi:MO/93/MIRSD/01/06

SEBI · SEBI · 2005-02-02 · 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 - minor penalty

Provisions invoked

• s. 19
• s. 12

Regulations

• Reg. 13(4)
• Reg. 5(1)
• Reg. 13(2)

Parties

• M/s. Hem Securities Ltd.

Holding

M/s. Hem Securities Ltd. was censured as a minor penalty for irregularities found during inspection. The order was to come into force with immediate effect.

Full text

Home » Enforcement » Orders » Orders of Chairman/Members Enforcement Enforcement▼ Order against Hem Securities Ltd Jan 12, 2006 | Orders : Orders of Chairman/Members MO/93/MIRSD/01/06 SECURITIES AND EXCHANGE BOARD OF INDIA

1.1 M/s. Hem Securities. 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. INB011069953. 1.2 Inspection of the books of accounts, documents and other records of the broker was carried out by SEBI for the period April 2000 to September 23, 2002 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 January 9, 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 23.12.04 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 18.01.05, 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 vide letter dated 02.02.05 sought extension of time upto 1 month and thereafter replied to the show cause notice vide letter dated 07.3.05. The broker submitted that it has not violated any major provisions of t

3.0 CONSIDERATION OF ISSUES 3.1 I have carefully considered the findings of inspection, Enquiry and the submissions made by the broker. Though the inspection report lists a number of violations alleged to have been committed by the broker, the EO has found the broker guilty of only three violations. I have noted the significant points as under: a) Contract notes not issued in a few cases It was alleged that contract notes were not issued in a few cases. Further, in the absence of date on the acknowledgement, it was unable to state whether the contract notes were issued within 24 hours of the execution of the trade and in some cases there was delay in issuing contract notes. The broker submitted that because of bug in the software being used for back office accounting, some trades of the same rate were getting consolidated. The broker had obtained written consent of such clients for consolidation of the trade. The broker submitted that it always issues contract notes within 24 hours of execution of the trade and it dispatched contract notes to all parties asking them to return duplicate copy thereof after affixing signature and date but sometimes the clients just return the duplicates without putting the date. The EO found the reply submitted by the broker generally satisfactory. The EO however observed that the broker did not notice the software problem till the inspection team pointed out the deficiencies. b) Dealt with unregistered sub-brokers It was alleged that the broker

Source: SecMarx — sebi:MO/93/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.