sebi:Order/KS/AA/2019-20/3780
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Facts / Headnote
Violations established; monetary penalty imposed under Section 15HB of the SEBI Act read with Regulations 26(iii), (xii), and (xvi) of the Stock Brokers Regulations
Provisions invoked
- s. 15
- s. 15H
- s. 15J
- s. 15F
- s. 28A
- s. 23J
- s. 15C
- s. 23H
- s. 23C
Regulations
- Reg. 7
- Reg. 6
- Reg. 9(f)
- Reg. 16
- Reg. 26
- Reg. 16(b)
- Reg. 200
Parties
- Marwadi Shares and Finance Limited
Holding
The Noticee (Marwadi Shares and Finance Limited) was found to have violated Point 12 of Annexure A to SEBI Circular MIRSD/SE/Cir-19/2009 (quarterly/monthly running account settlement), Regulation 16(b) of KRA Regulations, SEBI Circular MIRSD/Cir-5/2012 (delayed KYC upload for existing clients), SEBI Circular MIRSD/Cir-26/2011 (delayed KYC upload for new clients), and Clauses A(1), A(2), A(5) of the Code of Conduct under Schedule II read with Regulation 7 of the Stock Brokers Regulations, thereby attracting monetary penalty under Section 15HB of the SEBI Act read with Regulations 26(iii), (xii), and (xvi) of the Stock Brokers Regulations.
Full text
Page 2 of 42 a) Point no. 12 of the Annexure A to the SEBI Circular No. MIRSD/SE/Cir- 19/2009 dated December 03, 2009; b) Regulation 16 (b) of SEBI {KYC (Know Your Client) Registration Agency} Regulations, 2011 (as amended on March 13, 2014); c) SEBI circular no. MIRSD/Cir-5/2012 dated April 13, 2012; d) SEBI circular No. MIRSD/Cir- 26/2011 dated December 23, 2011; and e) Clause A (1), A (2) & A (5) of the Code of Conduct specified in Schedule II, read with Regulation 7 of the SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992 (hereinafter referred to as "Stock Brokers Regulations"); thereby, liable for monetary penalty under Regulation 26 (iii), (xii), (xvi) of the Stock Brokers Regulations.
Page 3 of 42 (a) The Noticee through email dated March 19, 2015 submitted running account settlement data for the six quarters falling in the inspection period. It is observed from the said data that the Noticee was not settling about 3% to 5% of client accounts during all quarters of the inspection period as given below: Quarter Total No. of clients No. of client accounts to be settled No. of client accounts settled Client accounts not settled Percentage not settled April – Jun 2013 1,16,131 53,308 50,860 2,448 4.59 July – Sep 2013 1,16,439 52,782 50,735 2,047 3.88 Oct – Dec 2013 1,16,415 52,845 50,480 2,365 4.48 Jan – Mar 2014 1,16,890 52,831 49,979 2,852 5.40 Apr – Jun 2014 1,17,406 53,653 51,312 2,341 4.36 July – Sep 2014 1,18,471 53,915 51,782 2,133 3.96
Page 4 of 42 inactive clients ranged from Rs. 18 lacs to Rs. 24 lacs. The data in this respect is as below: Summary of active clients with credit balances Quarter No. of active clients unsettled having credit balance Total amount of credit balance unsettled (Rs.) April – Jun 2013 544 90,77,675 July – Sep 2013 506 91,31,613 Oct – Dec 2013 608 1,60,27,537 Jan – Mar 2014 767 97,78,032 Apr – Jun 2014 523 73,49,337 July – Sep 2014 579 1,18,73,908
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Source: SecMarx — sebi:Order/KS/AA/2019-20/3780. 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.