sebi:Order/BM/GN/2024-25/30715

SEBI · SEBI · 2024-05-29 · Barnali Mukherjee, Adjudicating Officer

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Facts / Headnote

Violation established; penalty of Rs. 4,00,000 under Section 15HB of SEBI Act, 1992 imposed on Sharekhan Limited, payable within 45 days.

Provisions invoked

• s. 15
• s. 15H
• s. 15J
• s. 28A

Regulations

• Reg. 6
• Reg. 26
• Reg. 9

Parties

• Sharekhan Limited

Holding

Sharekhan Limited violated Regulation 26(xix) and Clauses A(1) and A(2) of Schedule II read with Regulation 9 of Stock Brokers Regulations, 1992 by extending use of trading terminals to unauthorized persons/places through three Authorised Persons. A monetary penalty of Rs. 4,00,000 under Section 15HB of SEBI Act, 1992 was imposed.

Full text

Adjudication Order in the matter of Sharekhan Limited Page 2 of 14 SHOW CAUSE NOTICE, REPLY AND HEARING 5) Show Cause Notice (hereinafter being referred to as the “SCN”) dated May 29, 2024 was issued to Noticee in terms Rule 4(1) of Adjudication Rules to show cause as to why an inquiry should not be initiated against Noticee and why penalty, if any, should not be imposed upon Noticee under Section 15HB of SEBI Act for the aforesaid alleged violations. 6) Following is allegation made against the Noticee in the SCN- Misuse of trading terminals a) During inspection of Noticee’s APs – Bhadra Services Private Limited and Asmita Jitesh Patel it was observed that terminal was not found at registered location (Unjha and Navi Mumabi respectively) and the trades were executed from the aforesaid terminals. Further, for AP Amitkumar S. Dhupad it was observed that the terminal was operated by a person other than the approved user. b) In view of the above instances, it was alleged that Noticee has violated the provisions of Regulation 26(xix) and Clauses A(1) and A(2) of Schedule II for Code of Conduct read with Regulation 9 of Stock Brokers Regulations, 1992. 7) The SCN was sent to Noticee through Speed Post AD and via digitally signed Email on June 05, 2024 and was duly served upon Noticee. Vide email dated June 21, 2024, Noticee sought inspection of documents. Vide email dated June 27, 2024 Noticee was requested to specify the documents which they want to inspect. Thereafter, vide email

Adjudication Order in the matter of Sharekhan Limited Page 3 of 14 the course of inspection is not culpable and the object of the inspection could well be achieved by pointing out the irregularities/deficiencies to the intermediary at the time of inspection and making it compliant. b) Noticee submitted that it circulates awareness emails to its APs regarding operation of trading terminals from registered location on a monthly basis. c) Noticee submitted that the it has not extended the use of its trading terminals to any unauthorized person or place and that the same have been allocated to the APs of the Noticee, in due compliance with the guidelines/ procedure prescribed by SEBI/ exchanges. AP - Bhadra Services Private Limited (BSPL) d) Noticee submitted that the aforesaid AP has its offices at 4 locations i.e. Unjha, Mehsana, Palanpur and Patan. Pertinently, the locations of all the AP’s offices have been duly registered/ recorded by the Noticee, in terms of regulatory requirements. The approved user for terminal Login ID TTBHSPL27 is one Mr. Ankitkumar Rameshbhai Prajapati, an employee of the AP, who operates out of the AP’s office located in Unjha. As informed by the AP, on the date of SEBI’s visit i.e., January 04, 2024, the abovementioned dealer was visiting the AP’s office situated in Palanpur and had logged in to his terminal only for the purpose of monitoring market movement. However, towards the end of the trading day, upon a request made by one client, the dealer p

Adjudication Order in the matter of Sharekhan Limited Page 4 of 14 inadvertently informed the inspecting officials that the said approved users were not present at the location, without verifying the same. f) Noticee submitted that the AP has now installed attendance systems across all its offices as advised by the Noticee, which will keep the AP apprised of the presence/ absence of all its dealers on any day. AP - Asmita Jitesh Patel g) Noticee submitted that the AP has a mapped set of clients to specific terminal ids for the ease of reachability of the clients. As informed by the AP, on the day of SEBI’s visit, i.e. January 09, 2024, the approved users for certain terminals were on leave, and orders were placed on the said terminals by the approved users for other terminals on account of mapping of clients to particular terminals. It is pertinent to note that orders were placed by individuals who were duly registered as approved users, albeit for other terminals. The said individuals had been duly registered with the AP after obtaining the approval of the exchanges for operating trading terminals. AP – Amit Kumar Dhupad h) AP - AmitKumar Dhupad has 5 BSE CTCL terminals at his office and Mrs. Vijaylaxmi Amit Dhupad is the approved user for one of the CTCL terminals. As informed by the AP, on the day of the inspection i.e. January 05, 2024, while Mr. Amitkumar Suresh Dhupad was occupied with the inspection, Mrs. Vijaylaxmi Amit Dhupad had received a request for placing an ord

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