sebi:WTM/GA/50/MIRSD/1/08

SEBI · SEBI · 2003-03-21 · G. ANANTHARAMAN, WHOLE TIME MEMBER

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Facts / Headnote

Warning - directed to be careful and cautious while dealing in securities market

Provisions invoked

• s. 19

Regulations

• Reg. 13(4)

Parties

• Jyoti Jain Investment & Finance Company Private Limited

Holding

SEBI found Jyoti Jain Investment & Finance Company Private Limited violated segregation, client-code and sub-broker norms but imposed only a warning directing it to be careful and cautious while dealing in the securities market.

Full text

stock broker (registration number INB 230782733). SEBI, vide order dated March 21, 2003 appointed an auditor viz. M/s J P Kapur & Uberoi (for short, the Inspecting Authority), in terms of the provisions of Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) Regulations, 1992 (for short, Broker Regulations) to conduct an inspection of books of accounts, documents and other records of the Broker for the period April 2001 to June 2003. The Inspecting Authority, in its report had observed certain deficiencies /irregularities committed by the Broker. The said findings were communicated by SEBI to the Broker for its comments. 2.1 Thereafter, an Enquiry Officer was appointed by SEBI vide order dated March 10, 2004 under the provisions of Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 (for short, Enquiry Regulations) to enquire into the alleged deficiencies / irregularities (observed during the inspection) committed by the Broker. The Enquiry Officer after conducting the proceedings in terms of the Enquiry regulations, vide report dated January 14, 2005 recommended to impose a minor

3.2 I have considered the Enquiry Report, the show cause notice issued to the Broker, the reply of the Broker and other materials available on record. The Enquiry Officer had observed that the Broker had not segregated the clients funds with own funds. It was alleged that the payment towards bank charges and other own expenses were made from clients bank accounts and that the share application money was received in the clients account. The Broker in its reply inter alia stated that the bank charges were debited in the client account (in certain instances) only when the client had requested for payment in the form of bank/ demand draft. Further, there were repeated instances of bank charges being debited to the client account. The Broker could have rectified the same by way of an instruction to the bank. However, it had failed to do so. In terms of SEBI circular dated November 18, 1993, inter alia, it shall be compulsory for all stock brokers to segregate the money of the clients and their own money in a separate account and that no payment for transactions in which the stock broker was taking a position as a principal would be allowed to be made from the client’s account subject to the conditions mentioned therein. Therefore, it is fairly established that the Broker had violated SEBI circular dated November 18, 1993. Further, the Enquiry Officer had observed that there was difference between the clients codes printed on contract note from the clients code in the trade text fi

Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002, hereby direct Jyoti Jain Investment & Finance Company Private Limited, Member, National Stock Exchange of India Ltd. (Registration number INB 230782733) to be careful and cautious while dealing in securities market. G.ANANTHARAMAN WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA Place: Mumbai Date: January 23, 2008

Source: SecMarx — sebi:WTM/GA/50/MIRSD/1/08. 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.