sebi:SD/AO/11/2010
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Facts / Headnote
Noticee found guilty of violating Clause A(2) of Code of Conduct; penalty of Rs. 75,000 imposed under Section 15HB
Provisions invoked
- s. 15
- s. 15H
- s. 15J
Regulations
- Reg. 7
- Reg. 199
Parties
- M/s FMS Securities Limited
Holding
The Noticee violated Clause A(2) of Schedule II read with Regulation 7 of the Broker Regulations by failing to exercise due skill, care and diligence, and is liable for monetary penalty under Section 15HB of the SEBI Act. A penalty of Rs. 75,000 was imposed on M/s FMS Securities Ltd.
Full text
Page 2 of 10 3. M/s FMS Securities Limited (hereinafter referred to as the ‘Noticee’) is registered with SEBI as a Member Broker of Bombay Stock Exchange (BSE) having SEBI Registration No. INB011079838. The findings of the Investigation Report (hereinafter referred to as ‘IR’) reveals that the Noticee allegedly facilitated the trading in the said scrip through its trading terminal for its client which were structured/synchronized and also reversed in nature by not following due skill, care and diligence in its trading activities contravening the provisions of clause A(2) of the schedule II of the code of conduct specified for stock brokers as per the Regulations 7 of the SEBI (Stock Brokers and Sub-Brokers) Regulations 1992 (hereinafter referred to as ‘Broker Regulations’). Therefore, the instant proceeding has been initiated for which the Noticee alleged to be liable for monetary penalty as prescribed under section 15 HB of the Securities and Exchange Board of India Act,1992 (hereinafter referred to as ‘SEBI Act’). APPOINTMENT OF ADJUDICATING OFFICER : 4. Ms. Babita Rayudu was appointed as the Adjudicating Officer vide order of SEBI dated 4th June, 2007 under section 15-I of SEBI Act r/w rule 3 of SEBI (Procedure for holding Inquiry and Imposing Penalty by Adjudicating Officer) Rules,1995 (hereinafter referred to as the ‘Adjudication Rules’) to inquire into and adjudge under Section 15HB of the Act, for the alleged violations of the Broker Regulations.
Page 3 of 10 SHOW CAUSE NOTICE/REPLY/PERSONAL HEARING : 6. A show cause notice (hereinafter referred to as ‘SCN’) dated January 21, 2008 under Rule 4 of the Adjudication Rules was issued to the Noticee asking it to show the cause as to why an enquiry should not be held against it and penalty be not imposed under Sections 15HB of the SEBI Act for its alleged violations of abovementioned provisions of the Broker Regulations.
Page 4 of 10 … we further clarify that we were not aware that our said client was associated with some other clients/company and our client had synchronized some other deals in the scrip behind our back as alleged … we were not aware that our client associated with each other and had some commonality of objectives. … we had no knowledge about the synchronized deals allegedly being done through our trading terminal by our client. No client reveals his mind to market strategy to his broker. We were totally unaware of the alleged synchronized deals and this findings has no basis.
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Source: SecMarx — sebi:SD/AO/11/2010. 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.