sebi:Order/GR/BM/2021-22/13339
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Facts / Headnote
Violations established; penalty of Rs. 3,00,000 imposed
Provisions invoked
- s. 15
- s. 12
- s. 15H
- s. 15I
- s. 15J
- s. 28A
- s. 23I
- s. 23J
- s. 23
- s. 23D
Parties
- Shreni Shares Private Limited
Holding
Shreni Shares Private Limited was held liable for misuse of client funds, client funding beyond T+2+5 days, enhanced supervision mis-reporting, CKYC non-upload and net-worth overstatement, and a consolidated penalty of Rs. 3,00,000 was imposed under Section 23D of SCRA, 1956 and Section 15HB of SEBI Act, 1992.
Full text
Adjudication Order w.r.t. Shreni Shares Private Limited. 2 | 24 A. Misuse of clients funds: Provisions of Clause 1 of Annexure of SEBI Circular SMD/SED/CIR/93/23321 dated November 18, 1993; and Clause 3 of Annexure of SEBI Circular SEBI/HO/MIRSD/MIRSD2/CIR/P/2016/95 dated September 26, 2016. B. Client funding: Provisions of Clause 2.6 of Annexure of SEBI Circular SEBI/HO/MIRSD/MIRSD2/CIR/P/2016/95 dated September 26, 2016 read with Clause 2(d) of SEBI circular CIR/HO/MIRSD/MIRSD2/CIR /P/2017/64 dated June 22, 2017. C. Enhanced Risk Based Supervision: Provisions of Clause 6.1.1(j) of Annexure of SEBI Circular SEBI/HO/MIRSD/MIRSD2/CIR/P/ 2016/95 dated September 26, 2016. D. Verification of data submitted towards Weekly Monitoring of Client Funds: Provisions of Clause 6.1.1(j) of Annexure of SEBI Circular SEBI/HO/MIRSD/MIRSD2/CIR/P/2016/95 dated September 26, 2016. E. Client Registration Process (KYC and KRA Process): Provisions of SEBI circular CIR/MIRSD/120/2016 dated November 10, 2016 read with SEBI circular no. CIR/MIRSD/66/2016 dated July 21, 2016. F. Net worth Verification: Provisions of Clause 6.1.1(j) of Annexure of SEBI Circular SEBI/HO/MIRSD/MIRSD2/CIR/P/2016/95 dated September 26, 2016 read with Rule 32 of Chapter III of the Rules of NSEIL and NSE Circular NSE/MEM/4300 dated July 25, 2003.
Adjudication Order w.r.t. Shreni Shares Private Limited. 3 | 24 SHOW CAUSE NOTICE, REPLY AND PERSONAL HEARING 4. A Show Cause Notice dated March 04, 2021 (hereinafter referred to as ‘SCN’) was issued to the Noticee under Rule 4 of SEBI (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995 read with Section 15-I of SEBI Act, 1992 and Rule 4 of Securities Contracts (Regulation) (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995 read with Section 23-I of Securities Contracts (Regulation) Act, 1956 to show-cause as to why an inquiry should not be initiated against the Noticee and why penalty should not be imposed upon the Noticee under Section 15HB of the SEBI Act and Section 23D of the SCRA act for the violations alleged to have been committed by the Noticee mentioned at para-2 above. The SCN was duly served upon the Noticee on March 18, 2021.
Adjudication Order w.r.t. Shreni Shares Private Limited. 4 | 24 6. Subsequently, in the interest of natural justice and in order to conduct an inquiry in terms of Rule 4 (3) of the Adjudication Rules, vide hearing Notice dated March 16, 2021, the Noticee was granted an opportunity of personal hearing on April 06,
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