sebi:Mo/185/mirsd/02/2006

SEBI · SEBI · 2005-07-02 · 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

Provisions invoked

• s. 19
• s. 12

Regulations

• Reg. 13(4)
• Reg. 5(1)
• Reg. 13(2)

Parties

• M/s. MPSE Securities Limited

Holding

SEBI censured M/s MPSE Securities Ltd, Member, BSE bearing SEBI Registration No. INB011102739, with immediate effect.

Full text

Home » Enforcement » Orders » Orders of Chairman/Members Enforcement Enforcement▼ Order against MPSE Securities Limited Feb 02, 2006 | Orders : Orders of Chairman/Members Mo/185/mirsd/02/2006 SECURITIES AND EXCHANGE BOARD OF INDIA

1.0 BACKGROUND 1.1 M/s. MPSE Securities Limited (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. INB011102739. 1.2 Inspection of the books of accounts, documents and other records of the broker was carried out by SEBI 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 May 14, 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 09.06.05 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 14.06.05, 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 replied vide letter dated 2.07.05 and submitted that the operational discrepancy observed by the inspecting authority have been rectified and complied with and the systems have been changed to prevent such occurrences in future. The broker requ

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) Acceptance of shares instead of cash towards BMC and Additional Capital It has been alleged that the broker accepted shares towards BMC and Additional Capital. The broker admitted the violation and stated that earlier it used to accept shares as part of deposit BMC/Additional Capital and after the inspection this practice has been stopped. The broker further stated that the Additional Capital would be accepted in the form of cash/ bank guarantee or fixed deposit. The members who had already deposited AC in demat shares had been given one week’s time to replace the same and the software for calculation/monitoring of BMC was being modified to ensure online checks. The broker has admitted the irregularity and thus the EO found him guilty. b) Lack of proper system to monitor the various components of BMC/ Additional Capital It has been alleged that the broker had resolved that BMC would be Rs.50, 000/- and 100% in cash. Since it was a normal practice of the broker to adjust various margin obligations of the sub-brokers from the BMC on day- to-day basis, the BMC often went below the minimum stipulated level of Rs.50,000/- and at times even became negative due to the obligations being greater than the BMC/Additional Capital itself. Further the broker

Source: SecMarx — sebi:Mo/185/mirsd/02/2006. 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.