sebi:WTM/AN/MIRSD/DOP/29769/2023-24
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Facts / Headnote
Violation established and fit-and-proper failure found; disqualification under amended Schedule II invoked on account of paired-contracts facilitation and pending FIR dated September 28, 2018
Provisions invoked
- s. 19
- s. 11(4)
- s. 11B
- s. 27
- s. 12(3)
- s. 154
- s. 29A(2)
- s. 209A
Regulations
- Reg. 9(f)
- Reg. 9(b)
- Reg. 27
- Reg. 6
- Reg. 5(e)
Parties
- Indovision Commodities Limited
Holding
The Noticee facilitated paired contracts on NSEL in violation of Clause A(1), A(2) and A(5) of the Stock Brokers Code of Conduct and is not a fit and proper person, with the disqualification under paragraph 3(b)(i) of amended Schedule II of the Intermediaries Regulations triggered by the pending FIR dated September 28, 2018 based on SEBI's complaint.
Full text
Final Order in respect of Indovision Commodities Limited in the matter of NSEL Page 2 of 28 January 21, 2021. The DA, based on findings recorded in the said Enquiry report, recommended that the registration of ICL as a stock broker may be cancelled.
Final Order in respect of Indovision Commodities Limited in the matter of NSEL Page 3 of 28 5. In light of the June 2022 SAT Order, it was felt necessary to furnish certain additional documents/material to the Noticee and grant an opportunity of personal hearing, before concluding the present proceedings. Accordingly, a supplementary SCN dated February 27, 2023 (“SSCN”) was served on the Noticee along with the following documents: 5.1. Copy of SEBI complaint dated September 24, 2018 filed with Economic Offences Wing (“EoW”); 5.2. Copy of FIR dated September 28, 2018 filed by SEBI under section 154 of Criminal Procedure Code, 1973 (“CrPC”); 5.3. Amended Schedule II of Intermediaries Regulations; and
Final Order in respect of Indovision Commodities Limited in the matter of NSEL Page 4 of 28 7.4. When the case involves the issue of trades, the entire trade log and order log of the scrip / contracts during investigation should be provided to the Noticee in order to produce a meaningful defence against the charges levied against it. 7.5. The paired contract which were launched by the NSEL in different commodities vide various circulars were available on the website of NSEL and so were in public domain accessible to everyone including the regulatory authorities like FMC. 7.6. No stock broker including the Noticee in its wildest imagination could have thought anything suspicious about the contracts launched by NSEL. 7.7. The Noticee has submitted that either it is the liability of the Stock Exchange for launch of any illegal contracts or the liability of the clients who have traded in those contracts. A Stock Broker is only acting as an agent of the Exchange as well as for its client and so the liability for trading in the illegal contracts cannot extend to the Stock Broker. 7.8. SEBI in the present case has not provided any material in the notice to suggest any negligence or connivance on the part and has simply stated that the Stock Brokers have participated/ facilitated pair contracts. The Noticee had relied on the judgement of the Hon’ble SAT in the matter of Networth Stock Broking v. SEBI (SAT appeal no. 5 of 2012 decided on June 19, 2012), Kasat Secutiites Pvt. Ltd. vs.
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Source: SecMarx — sebi:WTM/AN/MIRSD/DOP/29769/2023-24. 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.