sebi:Order/GR/KG/2019-20/6196

SEBI · SEBI · 2019-07-24 · G. Ramar, Adjudicating Officer

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Facts / Headnote

Penalty imposed on the Noticee for contravention of SEBI Circulars dated November 18, 1993 and April 17, 2008

Provisions invoked

• s. 12
• s. 19
• s. 28A
• s. 23
• s. 23D

Parties

• Suresh Rathi Securities Private Limited

Holding

The Noticee was held liable for contravening SEBI Circular No. SMD/SED/CIR/93/23321 dated November 18, 1993 read with SEBI Circular No. MRD/DoP/SE/Cir-11/2008 dated April 17, 2008 by utilising funds of credit balance clients for the purposes of debit balance clients, and a penalty of Rs. 5,00,000/- was imposed under Section 23D of the SCRA.

Full text

Adjudication Order against Suresh Rathi Securities Private Limited Page 2 of 12 APPOINTMENT OF ADJUDICATION OFFICER 3. The undersigned has been appointed as the Adjudicating Officer (AO) by SEBI, vide order dated July 24, 2019, under Section 19 read with Section 23-I (1) of the Securities Contracts (Regulation) Act, 1956 (hereinafter, referred to as “SCRA”) and Rule 4 of the Securities Contracts (Regulation) (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 2005 (hereinafter, referred to as “Adjudication Rules”) to conduct adjudication proceedings inter-alia in respect of the Noticee, in the manner specified under Rule 4 of the SCRA Adjudication Rules, 2005 read with Section 23-I of the SCRA, and if satisfied that penalty is liable, to impose such penalty deemed fit in terms of Rule 5 of the SCRA Adjudication Rules 2005 and Section 23D of the SCRA.

Adjudication Order against Suresh Rathi Securities Private Limited Page 3 of 12 d. With respect to the allegation of misusing the funds of credit balance clients for the purposes of debit balance clients, the Noticee while denying the same, has submitted that funds are fungible and cannot be segregated or earmarked in the name of clients. The Noticee had used its own networth in deposits with clearing member, bank balance, receivables which has always been in excess of the funds of credit balance clients.

Adjudication Order against Suresh Rathi Securities Private Limited Page 4 of 12 j. The observation of SEBI is a one off instance and SEBI has inspected the Noticee on several occasions but has never penalized the Noticee for any violation.

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