sebi:MO/97/MIRSD/01/06

SEBI · SEBI · 2005-01-03 · 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

Provisions invoked

• s. 19
• s. 12

Regulations

• Reg. 13(4)
• Reg. 5(1)
• Reg. 13(2)
• Reg. 12

Parties

• M/s. UTI Securities Limited

Holding

The Whole Time Member of SEBI warned M/s. UTI Securities Limited for three violations found by the Enquiry Officer: partial compliance with the code of internal procedures to prevent insider trading, delay in submitting broker database information, and failure to produce written consent letters from clients at the time of inspection.

Full text

Home » Enforcement » Orders » Orders of Chairman/Members Enforcement Enforcement▼ Order against M/S. UTI Securities Limited Jan 12, 2006 | Orders : Orders of Chairman/Members MO/97/MIRSD/01/06 SECURITIES AND EXCHANGE BOARD OF INDIA

1.2 Inspection of the books of accounts, documents and other records of the broker was carried out by SEBI for the period from April 2001 to March 2003. 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 August 23, 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 03.12.04 recommending a warning to be issued to the broker. 2.2 A copy of the Enquiry Report was sent to the broker on 16.12.04, 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 on the broker. 2.3 The broker replied vide letter dated 03.01.05 and stated that all necessary clarifications were furnished to the EO. The observations in the inspection report were appearing more due to the fact that there were gaps in the replies given to the inspection team rather than actual violations having taken place. The reason for the gaps was because there were a large number of branches of UTI Securities Ltd and the information sought by the inspecting

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 three violations. a) Whether the broker has failed to frame a code of Internal Procedures and Conduct It is alleged that the broker has not mentioned the following points in the internal code of conduct (i) Preservation of Price Sensitive Information (ii) Need to know basis (iii) Limited access to confidential information (iv) Chinese wall (v) Prevention of misuse of price sensitive information (vi) Pre-clearance of trades (vii) Restricted/grey list (viii) Other restrictions (ix) Reporting requirements for transaction in securities (x)

Source: SecMarx — sebi:MO/97/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.