sebi:Settlement_Orders_224_Order_against_Integrated_Enterprises_India_Ltd
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Facts / Headnote
Certificate of registration granted to Integrated Enterprises (India) Ltd. as a Depository Participant suspended for a period of six months, to come into force after expiry of one month from the date of the order to allow alternative arrangements for investors
Provisions invoked
- s. 11B
- s. 4(3)
- s. 11
- s. 11(1)
- s. 12
- s. 18
Regulations
- Reg. 13(4)
- Reg. 16
- Reg. 19
- Reg. 199
- Reg. 46
- Reg. 21
- Reg. 13
- Reg. 19(a)
- Reg. 64
- Reg. 65
- Reg. 23(1)
- Reg. 6
Parties
- Integrated Enterprises (India) Ltd.
Holding
IEL-DP was held guilty of exceeding permissible custody holdings under Regulation 19(a)(viii) and of opening new accounts in violation of SEBI's directive dated 31.08.2001. Its certificate of registration as a Depository Participant was suspended for six months, effective after one month from the order.
Full text
Accordingly IEL-DP accepted business as a Registrar DP and 18 months after IEL-DP had made the application seeking confirmation of migration of status, on 31.08.01, the Manager of D&CC, SEBI advised IEL-DP not to open fresh accounts. This advice was neither an order under the said Regulations nor a direction under the SEBI Act. If it were an
b) whether IEL-DP had opened new accounts in violation of the directive issued by SEBI and thus failed to put in place adequate monitoring system as required under Regulation 46 of the said Regulations:
order under the said Regulations, an order cannot be passed without providing for an opportunity nor can it be considered as a direction under Section 11(1) of the SEBI Act. The Authority under Section 11(1) of the SEBI Act can be exercised only by the Board or the Chairman of SEBI under delegation by the Board. Therefore this unilateral advice was not binding on IEL-DP. (iv) As regards the specific query as to whether IEL-DP had complied with the advice dated 31.08.01, IEL-DP submitted that even though IEL-DP was legally advised, the advice in the nature of direction was not legally valid and not binding. IEL-DP had taken sufficient care to ensure that the number of beneficiary accounts had not increased from August 2001. As against 2,24,076 accounts held by IEL-DP in August 2001, IEL-DP holds only 2,17,276 accounts as on 30.11.02. In respect of the 561 new accounts, which were mentioned in the Enquiry Order dated 18 April 2002 as having been opened after the advice dated 31 August 2001, it was submitted that those accounts were in pipeline even when the advice was being received by IEL-DP, that is at the time of receipt of the advice, the process for opening the accounts had already been initiated at the IEL-DP’s end at their various branches throughout the country by the customers and cannot therefore be considered as having been opened in violation of the advice of SEBI dated 31 August 2001 and in fact the number of new accounts in the pipeline at the time of enquiry was
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Source: SecMarx — sebi:Settlement_Orders_224_Order_against_Integrated_Enterprises_India_Ltd. 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.