sebi:VSS/AO-143/2009
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Facts / Headnote
Penalty of Rs.20,000 imposed under section 15HB of SEBI Act
Provisions invoked
- s. 15
- s. 15H
- s. 15J
Regulations
- Reg. 15
- Reg. 26
Parties
- Windfall Securities Pvt Ltd.
Holding
The Noticee acted as an unregistered sub-broker through GBL in violation of Clause A (2) of Schedule II read with regulation 15, regulations 26(xiv), (xv) and (xvi) and SEBI Circular dated May 21, 1997, and was held liable for monetary penalty under section 15HB of the SEBI Act. A penalty of Rs.20,000 was imposed on the Noticee.
Full text
Page 2 of 7 3. It was alleged that the Noticee’s trading as an unregistered Sub-broker through GBL was in violation of Clause A (2) of Schedule II of Code of Conduct for sub-brokers as stipulated in regulation 15 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/11-97 dated May 21, 1997.
Page 3 of 7 7. The Noticee vide letter dated June 18, 2007 replied to the SCN. The summary of the submissions are as under : • Windfall Securities Pvt Ltd. was earlier SEBI registered sub-broker. It had traded in scrip Seagul Ltd. on behalf of the clients during the period of year 2002. • The shares of clients were sold through Broker by clients giving delivery in advance to Broker's Demat A/c in order to avoid fear of auction. As the system was new of giving delivery through Demat A/c our clients were acting safe by giving delivery directly in Broker's Demat A/c. • Sir, we would like to draw your attention to the fact that as a sub-broker we were advising clients to transfer the shares directly in Broker's A/c so that as and when shares are sold delivery can be immediately given in the market through Broker's Demat A/c. • As there was illiquidity of the scrip and in order to avoid auction (in case of late delivery) clients were advised to give delivery in advance to Broker's Demat A/c. By doing so sir, we were acting safe for the interest of our clients. Sir, you are also requested to note that neither any client nor any broker has suffered any loss due to above transactions. We are no way connected with the management of the scrip. The default is purely in technical ground and has not created any loss of whatsoever nature either to the clients or Broker. • We therefore were just extra precautious in the initial days of the new system of Demat being introduced. • We therefor
Page 4 of 7 another broker. As Angel Broking refused to do the transaction in the scrip of Seagull we had to go through another broker for executing the said transactions. We had not done any other transaction in this manner. There are no complaints pending against us. We undertake to file an affidavit duly notarised in support of this submission, on or before August 31, 2009. We, therefore, request you to take a lenient view in the matter.
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Source: SecMarx — sebi:VSS/AO-143/2009. 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.