sebi:PG/AA/AO-78/2012

SEBI · SEBI · 2012-06-29 · Piyoosh Gupta, Adjudicating Officer

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

Charges held proved; penalty of Rs. 50,000 imposed under Section 15HB of SEBI Act, 1992

Provisions invoked

• s. 15
• s. 15H
• s. 15I
• s. 15J

Regulations

• Reg. 7

Parties

• M/s JBS Securities Pvt. Ltd.

Holding

The Noticee violated Clause A(2), A(5) and C(6) of the Code of Conduct for Stock Brokers read with regulation 7 of Broker Regulations by allowing unapproved persons to operate terminals and submitting false certificates, and is liable for penalty under Section 15HB of the SEBI Act, 1992, with a penalty of Rs. 50,000 imposed.

Full text

Adjudication Order in respect of M/s JBS Securities Pvt. Ltd. December 28, 2012 Page 2 of 9 2001 for allowing unapproved persons to operate trading terminals and not exercising due skill, care while appointing dealers and submitting false/forged certificates in respect of dealers operating the trading terminals. The alleged violations of the aforesaid provisions of law, if established, make the Noticee liable for monetary penalty under section 15HB of SEBI Act, 1992.

Adjudication Order in respect of M/s JBS Securities Pvt. Ltd. December 28, 2012 Page 3 of 9 However, we neither did have any means to verify the authenticity of the Certificates produced by them nor had any reason to doubt the bonafide of the trainees or the legitimacy of the certificates. Furthermore, we tried to ascertain the same with the Exchange as well but the exercise was futile as Exchanges do not entertain personal requests for verifying the authenticity of the Certificates and neither is any such system of verification of certificates is operational in any of the Exchanges in India. ii. ............it was only after we received communication from your end on 5.09.2011 stating that the said two certificates were not on records of BSE; that we realised the deceit done by the two persons. No adverse inference may be drawn from a non-negligent and bona fide act. iii. However, we prudently terminated the training of the two aforementioned trainees immediately with effect from 14.09.2011 and deactivated the names of Ms. Binita Shah and Mr. Shrinil Shah from ENIT system of NSE on 14.09.2011 and 15.09.2011 respectively. iv. With respect to allegation of lack of proper due diligence as the details sought like address proof, bio data etc. were not maintained by us, we reiterate that our broking firm is a very small entity with not more than six employees. Generally as a matter of practice a new employee or trainee is appointed on reference of past employee and the same practi

Adjudication Order in respect of M/s JBS Securities Pvt. Ltd. December 28, 2012 Page 4 of 9 6. For the purpose of inquiry under rule 4 of the Rules, an opportunity of hearing was granted to the Noticee on December 11, 2012 vide notice No. EAD5/ADJ/PG/AA/OW/26313/2012 dated November 26, 2012. The Noticee vide letter/email dated December 6, 2012 requested for adjournment of hearing to any date after December 25, 2012. In the interest of natural justice and in order to conduct an inquiry as per rule 4(3) of the Rules, vide notice No. EAD5/ADJ/PG/AA/OW/27541/2012 dated December 11, 2012 a final opportunity of personal hearing was granted to the Noticee on December 26, 2012. The Noticee vide letter/email dated December 18, 2012 confirmed the attendance for the said hearing scheduled at SEBI, Head office, Mumbai. However, the Noticee vide email dated December 20, 2012 again requested for reschedulement of the hearing to any other suitable date at the SEBI's Western Regional Office in Ahmedabad. Vide email dated December 20, 2012 the noticee was asked to attend the hearing on December 26, 2012 scheduled at SEBI, Head office, Mumbai. On the date of hearing, the Noticee attended the hearing through its authorized representative and reiterated the

Source: SecMarx — sebi:PG/AA/AO-78/2012. 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.