sebi:VSS/AO-02/2009
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Facts / Headnote
Alleged violations of PFUTP and Brokers Regulations not established; matter disposed of
Provisions invoked
- s. 15
- s. 15J
Regulations
- Reg. 7
- Reg. 3
Parties
- N K Tiwary
Holding
The Adjudicating Officer held that the alleged violations of PFUTP Regulations and the Code of Conduct for Stock Brokers by the Noticee (N K Tiwary) were not established, and the matter was disposed of without imposition of any penalty.
Full text
Page 2 of 11 2. It was alleged that one of the brokers, N K Tiwary, Member, CSE (hereinafter referred to as “Noticee”) violated the provisions of regulations 3, 4 (1), 4 (2) (a), (b), (e), (g), (n) and (o) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Markets) Regulations, 2003 (hereinafter referred to as “PFUTP”) and clauses A (1), (2), (3), (4) and B (4) (a) of Code of Conduct for Stock Brokers as specified in Schedule II under Regulation 7 of SEBI (Stock Brokers and Sub Brokers) Regulations, 1992 (hereinafter referred to as “Brokers Regulations”), and therefore, liable for monetary penalty under sections 15HA and 15 HB of Securities and Exchange Board of India Act, 1992 (hereinafter referred to as “SEBI Act”).
Page 3 of 11 5. The Noticee vide letter dated June 30, 2008 replied to the SCN stating, inter alia, the following : a. All the trades was done on the C-star system of the Calcutta Stock Exchange. No one places any out of way offe on the system because these offers are open to all members and if any other member grabs the offer, the offers may suffer financial (Trade)/Losses and borne by brokers and not clients. b. It is apparent from your investigation that not a single trade took place on our (Proprietary) account or on account of any related persons account. We are not behind any single trade. c. All the trades were executed on account of various clients of (and by) various members and it is not possible to correlate them by the data provided by you. According to our database most of the client are independent and not co relatable. It means there can not be any sort of connivance or unfair trade practice. d. Since most of the trade at our end resulted in deliveries, it cannot be said that trades where executed without intention of performing them or change of ownership of such securities. e. Your findings give us credit of 13.61% of he total turnover. With such a small part of the trade, one cannot do circular trade or more importantly have any meaningful control on the price movement of any securities. If at all, price movements can be manipulated or controlled by majority control on turnover only and NEVER by the scanty turnover of 13.61% spread over 4 months with many ab
Page 4 of 11 j. We do look at the KYC, but at times it is not possible to correlate a single name in 2 KYC out of so many. There is no software, which defects the common name, and even if common name comes up in KYC, no regulation bars trade on account of such person. k. All the transaction for purchase or sale of securities for clients was made in normal course of business and by request of clients. The broker never encourages sale or purchase of securities with object to generating commission or brokerage.
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Source: SecMarx — sebi:VSS/AO-02/2009. 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.