sebi:Order/AN/PR/2023-24/30172
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Facts / Headnote
Violations of misuse of client funds, quarterly/monthly settlement and segregation requirements held established; Noticee's contentions rejected
Provisions invoked
- s. 11B
- s. 11
- s. 15
- s. 19
- s. 12
- s. 15H
- s. 15I
- s. 15J
- s. 12A
- s. 15F
- s. 28A
- s. 23
- s. 23I
- s. 23D
- s. 23J
Parties
- Aranox Commodities Private Limited
Holding
The Noticee misused client funds/securities, failed to carry out quarterly/monthly settlement of client funds, and failed to segregate client funds/securities in violation of SEBI Circulars dated November 18, 1993, December 03, 2009 and September 26, 2016.
Full text
Adjudication Order in the matter of Aranox Commodities Private Limited. |Page 2 of 25 SEBI/HO/MIRSD/MIRSD2/CIR/P/2016/95 dated September 26, 2016 (hereinafter also referred to as ‘SEBI Circular dated September 26, 2016’). 1.2. Quarterly/ monthly settlement of funds/securities of clients: Clause 12 (e) of Annexure-A of SEBI Circular SEBI/MIRSD/SE/Cir-19/2009 dated December 03, 2009 and Clause 8.1.1 of SEBI Circular SEBI/HO/MIRSD/MIRSD2/CIR/P/2016/95 dated September 26, 2016. 1.3. Segregation of client’s funds and securities: Clause 1 of Annexure of SEBI Circular SMD/SED/CIR/93/23321 dated November 18, 1993 and Clause 2.4.2 of Annexure of SEBI Circular SEBI/HO/MIRSD/MIRSD2/CIR/P/2016/95 dated September 26, 2016.
Adjudication Order in the matter of Aranox Commodities Private Limited. |Page 3 of 25 C. SHOW CAUSE NOTICE, REPLY AND HEARING 3. A Show Cause Notice bearing No. SEBI/HO/EAD/EAD5/P/OW/2023/43208/1 dated October 20, 2023 (hereinafter also referred to as “SCN”) was served upon the Noticee in terms of Rule 4 of SEBI (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995 read with Section 15-I of the SEBI Act, 1992 and under Rule 4 of the Securities Contracts (Regulations) (Procedure for Holding Inquiry and Imposing Penalties) Rules, 2005 read with Section 23I of the Securities Contracts (Regulation) Act, 1956 to show cause as to why inquiry should not be held and penalty be not imposed under Section 23D of Securities Contracts (Regulation) Act, 1956 and under Section 15HB of SEBI Act, 1992 for the aforesaid alleged violations.
Adjudication Order in the matter of Aranox Commodities Private Limited. |Page 4 of 25 4.2. Finding B: Quarterly/ monthly settlement of funds/securities of clients Non-settlement of funds of active clients in 1 instances (out of sample of 148 instances) amounting to Rs. 66.6 Thousand. Non-settlement of funds of inactive clients with amount of non-settlement ranging from Rs. 5.8 lakhs (4 clients) to Rs. 10.47 lakhs (7 clients) during the inspection period spanning 4 quarters. In this regard, following was inter alia observed and/or alleged by SEBI:
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Source: SecMarx — sebi:Order/AN/PR/2023-24/30172. 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.