sebi:Order/BM/RK/2024-25/30669

SEBI · SEBI · 2024-02-23 · Barnali Mukherjee, Adjudicating Officer

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Facts / Headnote

Violation established; penalty of Rs. 4,00,000 imposed under Section 15HB of the SEBI Act

Provisions invoked

• s. 15
• s. 19
• s. 15H
• s. 15I
• s. 15J
• s. 28A

Parties

• LKP Securities Limited

Holding

The Noticee, LKP Securities Limited, was found to have violated Para III and IV of SEBI Circular No. SEBI/HO/MIRSD/DOP1/CIR/P/2018/54 dated March 22, 2018 read with SEBI Master Circular dated May 17, 2023 for stock brokers by failing to maintain evidence of pre-trade authorization for orders placed by its clients and clients mapped with its Authorized Person. A penalty of Rs. 4,00,000 was imposed under Section 15HB of the SEBI Act.

Full text

Adjudication Order in the matter of inspection of LKP Securities limited Page 2 of 19 the Noticee vide letter dated February 23, 2024 and March 07, 2024, received by SEBI on March 11, 2024, it had been alleged that the Noticee contravened various provisions of the securities law in respect of the activities carried out by it. The summary of the violation alleged to have been committed by the Noticee and corresponding provision of the securities law is given in the table 1 below:- Table 1:

Adjudication Order in the matter of inspection of LKP Securities limited Page 3 of 19 SHOW CAUSE NOTICE, REPLY AND HEARING 5) A Show Cause Notice (“SCN”) No SEBI/HO/EAD/EAD3/P/OW/2024/000018189/1 and a Supplementary Show Cause Notice (SSCN) dated May 31, 2024 and July 19, 2024 respectively was issued to the Noticee in terms Rule 4(1) of SEBI Adjudication Rules to show cause as to why an inquiry should not be initiated against it and why penalty, if any, be not imposed upon it under Section 15HB of the SEBI Act for the aforesaid violation alleged to have been committed by it. 6) The said SCN and SSCN was sent to the Noticee through Speed Post AD and via digitally signed email dated May 31, 2024 and July 19, 2024, which was duly delivered on the same day. The proof of service is on record. Noticee vide email dated June 21, 2024 submitted its reply to the SCN in the matter. In the interest of natural justice and in order to conduct inquiry in terms of Rule 4(3) of the SEBI Adjudication Rules, an opportunity of hearing was granted to the Noticee on July 19, 2024 vide hearing Notice dated June 24, 2024. Subsequent to issuance of hearing Notice, additional instances of non-compliances was communicated to the Noticee vide SSCN. Noticee vide email dated July 26, 2024 sought more time to reply to the SSCN, which was granted to the Noticee vide email dated July 27, 2024 wherein it was advised to submit its reply to the SSCN latest by July 31, 2024. Noticee submitted its reply to the SS

Adjudication Order in the matter of inspection of LKP Securities limited Page 4 of 19 Reply of the Noticee 7.1 Noticee submitted that the total no of unique instances were not 103 as alleged in the SCN rather there were 53 unique clients wherein 24, 26 and 3 clients pertained to BSE, NSE and MCX respectively.The details are mentioned herein below: BSE: 24 Clients (with 3 duplicates, resulting in 24 unique clients) NSE: 26 Clients (all unique) MCX: 50 Clients (with 47 duplicates, resulting in 3 unique clients) 7.2 It submitted that erroneously its team mentioned regarding the delivery of contract notes in Annexure 11, which was relevant to Annexure 7 and now has provided all the 53 unique instances in a revised Annexure. 7.3 That approx. 40% to 50% trades are executed online via IBT and STWT terminals and the same percentage of clients use its call and trade facility, with all recordings stored in its system. 7.4 That very few clients place order offline by visiting its office wherein they are required to sign an order deal sheet maintained by the dealers as per its standard procedure for offline placements. 7.5 That due to its corporate office and most of its branch office relocation, it was initially unable to retrieve and present those physical copies to the inspection team. It further submitted that it had retrieved all deal sheets and confirmed that all data is peoperly maintained as per regulatory requirements. 7.6 That for 1 instance there was no trade for the client co

Source: SecMarx — sebi:Order/BM/RK/2024-25/30669. 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.