sebi:VSS/AO-142/2009
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Facts / Headnote
Penalty imposed on the Noticee for violation of Code of Conduct for sub-brokers and Brokers Regulations
Provisions invoked
- s. 15
- s. 15H
- s. 15J
Regulations
- Reg. 7
- Reg. 199
- Reg. 26
Parties
- Galaxy Broking Ltd.
Holding
The Noticee (Galaxy Broking Ltd.) was held liable for violating Clause A (2) and A (5) of Schedule II of Code of Conduct for sub-brokers as stipulated in regulation 7 of Brokers Regulations and regulation 26(xiv), (xv) and (xvi) of Brokers Regulations and SEBI Circular No.SMD/Policy/Circular/3-97 dated March 31, 1997, by transacting on behalf of Windfall Securities Ltd. (WSL), an unregistered sub-broker, and a penalty of Rs.20,000 was imposed under section 15HB of SEBI Act.
Full text
Page 2 of 9 3. It was alleged that WSL traded through the Noticee in the capacity of an unregistered Sub-broker. Consequently, it was alleged that the Noticee having executed transactions for an unregistered Sub-broker had violated Clause A (2) and A (5) of Schedule II of Code of Conduct for sub-brokers as stipulated in regulation 7 of (Stock Brokers and Sub Brokers) Regulations, 1992 (hereinafter referred to as “Brokers Regulations”) and regulation 26(xiv), (xv) and (xvi) of Brokers Regulations and SEBI Circular No.SMD/Policy/Circular/3-97 dated March 31, 1997.
Page 3 of 9 said SCN. The Noticee vide letter dated June 18, 2007 replied to the SCN. The summary of the submissions are as under :
Page 4 of 9 2. We have not funded nor provided shares to our sub broker for the execution of the said trades. 3. The trades of our client were not artificial in as much as clients purchased/ sold shares and the difference had been paid for. Therefore, the shares, which were accepted as delivery, could not have created artificial or false market. Similarly in case of sale of shares, when delivery has taken place, it could not have created artificial or false market.
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Source: SecMarx — sebi:VSS/AO-142/2009. 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.