sebi:Order/AN/PR/2024-25/31097
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Facts / Headnote
Benefit of doubt allowed for 67 BSE email instances; violation held established for persisting email-id mismatches in NSE data; final penalty not visible in excerpt
Provisions invoked
- s. 11B
- s. 11
- s. 15
- s. 19
- s. 15H
- s. 15I
- s. 15J
- s. 15F
- s. 28A
Regulations
- Reg. 6
- Reg. 9
Parties
- Motilal Oswal Financial Services Limited
Holding
The Adjudicating Officer allowed benefit of doubt for 67 BSE email mismatches but held established that the Noticee violated Paragraph 33 of the May 22, 2024 Master Circular and Clause A(2) of Schedule II read with Regulation 9 of the Stock Brokers Regulations for persisting email-id mismatches in NSE UCC data.
Full text
Adjudication Order in the matter of Motilal Oswal Financial Services Limited. |Page 2 of 36 Pursuant to the above, Post Inspection Analysis was carried out by SEBI. SEBI inter alia observed and alleged that the Noticee was in violation of following provisions of securities laws: 3.1. Paragraph 33 of Master Circular SEBI/HO/MIRSD/MIRSD-PoD- 1/P/CIR/2024/53 dated May 22, 2024; Clause A (2) of Schedule II of Code of Conduct read with Regulation 9 of SEBI (Stock Brokers) Regulations, 1992 [‘Stock Brokers Regulations’]. 3.2. Annexure 7 of Paragraph 20.1.1 and Paragraph 21.3 of Master Circular SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2024/53 dated May 22, 2024; Paragraph 7 and 51 of SEBI master circular SEBI/HO/MIRSD/SECFATF/P/CIR/2023/169 dated October 12, 2023; Annexure 2 of SEBI Circular CIR/MIRSD/16/2011 dated August 22, 2011. 3.3. Paragraph 33 2.4 of Master Circular SEBI/HO/MIRSD/MIRSD-PoD- 1/P/CIR/2024/53 dated May 22, 2024. 3.4. Paragraph 32.5.1.(e) of Master Circular SEBI/HO/MIRSD/MIRSD- PoD-1/P/CIR/2024/53 dated May 22, 2024.
Adjudication Order in the matter of Motilal Oswal Financial Services Limited. |Page 3 of 36 Act, 1992 and Rule 3 of SEBI (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995, the Competent Authority appointed the undersigned as Adjudicating Officer vide order dated August 29, 2024, to inquire into and adjudge under Section 15HB of the SEBI Act, 1992 for the aforesaid alleged violation by the Noticee. The said proceedings of appointment were communicated to the undersigned vide Communique dated August 30, 2024.
Adjudication Order in the matter of Motilal Oswal Financial Services Limited. |Page 4 of 36 4.2.2. On verification of Back office data with the NSE exchange data it was observed that there was mismatch in 3753 Mobile no instances. On query the SB has stated that “We have received email modification from client after submitting the client master”, however the SB has not submitted any proof to substantiate its stand despite several telephonic reminders. Further, exchange did not receive any response for 171 instances from the SB. In 56 instances SB response was found incorrect. 4.2.3. Findings of the inspection were communicated to the entity vide letter dated May 03, 2024. No reply was provided by SB. Vide e-mail dated 08.05.2024, extension till 23.05.2024 was requested by SB. Reminder e-mail dated 06.05.2024 and 13.05.2024 were sent to SB for providing reply to findings of inspection, however no reply had been received as on date – 28.05.2024. 4.2.4. In this regard, SEBI observed that Paragraph 33 of Master Circular SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2024/53 dated May 22, 2024 provides the responsibility on SBs for uploading client details. In the instant case, SB had not provided any response for 171 cases out of 3753 instances. Additionally, no documents were provided by SB in support of its statement that it had received email modification from the client. Reminders were sent by exchanges and reply of SB was also sought to the inspection findings, however no reply was receive
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