sebi:PKK/AO/289/2010
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Facts / Headnote
Monetary penalty imposed
Provisions invoked
- s. 15A
- s. 15
- s. 15H
- s. 15J
- s. 23A
- s. 23I
- s. 23J
- s. 15F
- s. 23H
Regulations
- Reg. 3
- Reg. 4
- Reg. 4(1)
- Reg. 17
- Reg. 17(1)
- Reg. 26
- Reg. 21
- Reg. 26(v)
- Reg. 212
Holding
The Noticee violated the Brokers Regulations, SCR Rules, PFUTP Regulations and SEBI Circulars and a total monetary penalty of Rs. 3,00,000 (Rs. 50,000 each under Sections 15HA, 15HB, 15A(c) and 15F(a) of the SEBI Act and Sections 23A(b) and 23H of the SCRA) was imposed.
Full text
Page 2 of 10 Regulations, 1992 (hereinafter referred to as the ‘Brokers Regulations’), the Securities Contract (Regulation) Rules, 1957 (hereinafter referred to as the ‘SCR Rules’), various SEBI Circulars, and SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Markets) Regulations, 2003 (hereinafter referred to as ‘PFUTP Regulations’).
Page 3 of 10 c. Irregularities regarding issuance and dispatch of contract notes - Failure to issue contract notes in the prescribed format and dispatch it properly. d. Irregularities relating to third party acceptance/transfer of shares/fund - accepted securities from third parties for the purpose of delivery. e. Failure to segregate the clients funds from own funds and using of same for other client/ own purpose- Failure to maintain strict line of demarcation between client account and own account. f. Indulging in fund based activities - granted huge loans to various parties and therefore indulged in fund based activity. g. Indulging in unfair trade practice viz. circular trading- entered into transactions which do not appear to be at arm’s Length distance and display a pattern of circular trading. h. Non Reconciliation of Dividend Account and delayed transfer of dividend to the clients- Failure to disburse the dividend received to the clients for a long time.
Page 4 of 10 8. As the Noticee has not put up any defence or challenged the SCN, it can be assumed that the charges levelled in the SCN have been accepted by the Noticee. This is in accordance with the principle laid by Hon’ble Securities Appellate Tribunal (SAT) in the matter of Classic Credit Ltd. v. SEBI1 wherein it was inter-alia held that “…The appellants did not file any reply to the second show-cause notice. This being so, it has to be presumed that the charges alleged against them in the show-cause notice were admitted by them”. However, in order to pass a speaking order, the undersigned is going to analyse the evidences and allegations made against the Noticee taking into account the facts and material available on record.
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Source: SecMarx — sebi:PKK/AO/289/2010. 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.