sebi:WTM/GM/EFD1-DRA2/64/2019-20

SEBI · SEBI · 2017-09-15 · G. Mahalingam, Whole Time Member

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

System Support Services bearing SEBI Registration No. INR000000502 stands prohibited from accepting any new clients for a period of two months from the date of this order, with immediate effect.

Provisions invoked

• s. 19
• s. 12(3)

Regulations

• Reg. 4
• Reg. 13
• Reg. 14(1)
• Reg. 14(3)
• Reg. 23
• Reg. 14(2)
• Reg. 28
• Reg. 27
• Reg. 28(1)

Parties

• System Support Services

Holding

System Support Services violated specimen-signature maintenance and due-diligence norms in processing demat and transfer requests and is prohibited from accepting any new clients for two months from the date of the order.

Full text

Order in respect of System Support Services Page 2 of 31 b. SSS had not exercised due care and diligence while processing demat requests in order to verify their genuineness. Further, by scanning the signatures from the Demat Request Forms (“DRFs”) and showing them to the inspection team as if they were used during the process of entertaining the demat requests, the Noticee had tried to mislead the inspection team. c. SSS processed the transfer requests for shares without checking the genuineness of transfer requests with the specimen signatures of the sellers and/or calling for documents to ascertain genuineness of the transfer requests. Further, SSS had transferred shares even without the approval of the company. d. SSS had not exercised due care and diligence while processing transfer requests as in some cases, date of execution of the transfer deed between the transferor and transferee was not mentioned. e. The Noticee had missed the Record Date in respect of “Arrow coated Products Limited” in the year 2014-2015.

Order in respect of System Support Services Page 3 of 31 thereof, vide Communication of Order appointing Designated Authority dated September 15, 2017. 2.2. Pursuant to the said appointment, the DA issued an SCN dated October 13, 2017, which inter alia contained the relevant extracts of the Inspection Report. The DA enquired into the alleged violation of the following provisions of law, viz.— a. Regulation 14(3) (c ) of the SEBI (Registrars to an Issue ) and Share Transfer Regulations , 1993 read with Instruction 2(vii) of Instructions to RTI/STA dated October 11,1994; b. Clauses 1 and 3 of the Code of Conduct prescribed under Regulation 13 of SEBI (Registrars to an Issue ) and Share Transfer Regulations , 1993; c. RTI Circular No. 1 (2000-2001) dated May 09, 2001 along with Point h of the Schedule (Specific Activities) as given in the instructions to RTA dated October 11, 1994 and Clause 3 of the Code of Conduct prescribed under Regulation 13 of SEBI (Registrars to an Issue ) and Share Transfer Regulations , 1993; and d. Clause 25 of the Code of Conduct prescribed under Regulation 13 of SEBI (Registrars to an Issue) and Share Transfer Regulations, 1993. 2.3. For the violations as stated above, the DA, in his report dated January 18, 2018, found that SSS had contravened the provisions as enumerated at 2.2 (a), (b) and (c) above.

Order in respect of System Support Services Page 4 of 31 2.4. In view of the same, the DA in terms of provisions of Regulation 27 of the Intermediaries Regulations recommended that the Certificate of Registration of SSS may be suspended for a period of one month.

Source: SecMarx — sebi:WTM/GM/EFD1-DRA2/64/2019-20. 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.