sebi:PM/AO/NK-13/2017
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Facts / Headnote
Noticee held to have violated circulars and Code of Conduct; penalty of Rs. 15,00,000 imposed under Section 23D of SCRA, 1956 and Section 15HB of SEBI Act, 1992
Provisions invoked
- s. 15
- s. 12
- s. 15H
- s. 23
- s. 23D
Regulations
- Reg. 6
- Reg. 9(f)
- Reg. 199
- Reg. 26
- Reg. 9
Parties
- Systematix Shares and Stocks (I) Limited
Holding
The Noticee failed to segregate client funds/securities, misutilised credit-balance clients' funds for debit-balance clients and group entities, and failed to use 'client' nomenclature, violating both SEBI circulars and Clauses A(1), A(2), A(5) of the Code of Conduct, warranting a consolidated penalty of Rs. 15,00,000 under Section 23D SCRA and Section 15HB SEBI Act.
Full text
Page 2 of 22 overdraft and also transferred funds from the clients’ Bank accounts to its own Bank account and also to Bank account of its other group companies. It was also alleged that the nomenclature of some of the Bank accounts did not contain the word "client" as required in the SEBI circular. In view of the above it was alleged that the Noticee had misutilised the funds of the clients, thereby not exercising due skill and care as a broker in addition to having compromised on its integrity.
Page 3 of 22 Show Cause Notice, Reply and Personal Hearing 5. The Noticee was issued a show cause notice dated June 23, 2017 (hereinafter referred to as 'SCN') under Rule 4(1) of the said Rules as to why an inquiry should not be held and penalty not be imposed under Section 23D of Securities Contracts (Regulation) Act-1956 and Section 15HB of the SEBI Act- 1992 read with Regulations 26 (xiii), (xv) and (Xvi) of the SEBI (Stock and Sub-Brokers) Regulations 1992, for the alleged violation of the provisions of law.
Page 4 of 22 04-Apr-13 2139.67 159.15 1288.76 691.76 32% 10-May-13 1950.36 128.08 1098.77 723.51 37% 05-Jun-13 1942.22 144.27 1098.77 699.18 36% 20-Jun-13 2244.06 147.29 1123.77 973.01 43% 11-Jul-13 2337.58 113.77 1323.77 900.05 39% 31-Jul-13 2228.52 149.55 1423.77 655.21 29% 07-Oct-13 1586.25 105.85 1238.76 241.64 15% 02-Dec-13 1602.65 128.73 1188.76 285.16 18%
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Source: SecMarx — sebi:PM/AO/NK-13/2017. 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.