sebi:Order/MC/VS/2019-20/6615

SEBI · SEBI · 2019-06-13 · Maninder Cheema, Adjudicating Officer

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Facts / Headnote

Violation of 1993 Circular partly established; penalty of Rs. 3,00,000 imposed under Section 23D of SCRA; running-accounts charge not established

Provisions invoked

• s. 15
• s. 12
• s. 15H
• s. 15J
• s. 23J
• s. 23
• s. 23D
• s. 23I

Regulations

• Reg. 9

Parties

• DBFS Securities Ltd.

Holding

The Noticee violated SEBI Circular No. SMD/SED/CIR/93/23321 dated November 18, 1993 by using funds of credit balance clients for settlement obligations of debit balance clients and is liable to a monetary penalty of Rs. 3,00,000 under Section 23D of the SCRA; the allegation of non-settlement of running accounts was not established.

Full text

Adjudication Order in respect of DBFS Securities Ltd. in the matter of DBFS Securities Ltd. Page 2 of 25 APPOINTMENT OF ADJUDICATING OFFICER

Adjudication Order in respect of DBFS Securities Ltd. in the matter of DBFS Securities Ltd. Page 3 of 25 b) SEBI inspected the books of accounts, records and other related documents of the Noticee for the period between April 1, 2016 till March 9, 2018 (hereinafter referred to as the “inspection period” or “relevant period”). c) The inspection was carried out with an objective of, inter alia, examining segregation of client and own funds and securities and settlement of running accounts The findings / observations made during the course of inspection vis-à-vis the Noticee were forwarded to the said Noticee vide letter dated August 21, 2018. In order to ascertain whether there was clear segregation of client funds, the methodology and principles stipulated in SEBI Circular No. SEBI/HO/MIRSD/MIRSD/CIR/P/2016/95 dated September 26, 2016 was followed. d) The following tables reflect possible misutilisation of credit balance clients for other purposes such as meeting settlement obligations of debit balance clients:- Table 1 Date Total of end of the day Balance in all client bank accounts Collateral deposited with clearing corporation/ clearing member in form of cash and cash equivalents Total credit balance of all clients after adjusting for open bills and uncleared cheques G AA A B C G=A+B-C 03-Aug-17 7,12,10,802.40 17,70,00,000.00 19,90,06,260.76 4,92,04,541.64 04-Aug-17 32,32,34,968.70 22,20,00,000.00 22,97,29,037.19 31,55,05,931.50 08-Aug-17 19,84,72,646.61 19,70,00,000.00 36,

Adjudication Order in respect of DBFS Securities Ltd. in the matter of DBFS Securities Ltd. Page 4 of 25 02-Aug-17 6,03,31,100.09 17,20,00,000.00 20,42,84,343.36 2,80,46,756.73 07-Nov-17 1,21,95,444.99 20,40,00,000.00 19,81,90,437.20 1,80,05,007.79 04-Sep-17 1,48,69,091.56 17,15,00,000.00 23,53,56,636.39 -4,8 ,87,544.83 18-Sep-17 93,56,011.29 16,77,60,000.00 14,92,03,285.64 2,79,12,725.65 08-Nov-17 3,16,14,755.48 18,90,00,000.00 21,25,40,900.22 80,73,855.26 11-Aug-16 1,60,00,252.57 12,17,60,000.00 14,29,59,911.79 -51,99,659.22 12-Sep-16 1,29,78,844.24 12,70,00,000.00 15,89,41,356.62 -1,89,62,512.38 27-Oct-16 1,17,38,506.74 13,90,00,000.00 16,96,34,420.59 -1,88,95,913.85 05-Apr-16 49,25,315.91 10,92,60,000.00 10,50,69,949.99 91,15,365.92 21-Aug-17 7,23,71,884.88 16,27,60,000.00 20,77,13,514.69 2,74,18,370.19 26-Oct-16 1,70,71,109.90 13,40,00,000.00 17,45,26,501.04 -2,34,55,391.14 16-Nov-16 1,27,97,648.75 12,70,00,000.00 13,09,87,514.32 88,10,134.43 11-Nov-16 1,54,63,329.36 12,20,00,000.00 12,75,69,894.30 98,93,435.06 01-Aug-17 6,03,54,004.06 15,20,00,000.00 15,88,47,835.59 5,35,06,168.47

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