sebi:WTM/KMA/IVD/241/03/2010
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Facts / Headnote
Show cause notice disposed of with a warning to the noticee and a direction to comply with relevant laws
Provisions invoked
- s. 19
- s. 12(1)
- s. 12
Regulations
- Reg. 11(1)
Parties
- Mr. Sharad B. Shah
Holding
The noticee, Mr. Sharad B. Shah, was found guilty of contravening Section 12(1) of the SEBI Act, Rule 3 of the Stock Brokers and Sub-brokers Rules, 1992, and Regulation 11(1) of the Stock Brokers and Sub-brokers Regulations, 1992, by acting as an unregistered sub-broker. He was warned and directed to comply with relevant laws governing his activities in the securities market.
Full text
Page 2 of 3 in the show cause notice, a reminder was issued to him, on September 4, 2009. Thereafter, vide letter dated October 3, 2009, the noticee submitted his reply and thereafter, appeared before me on March 9, 2010 for a personal hearing. In the hearing, the noticee stated that neither he nor the persons for whom he had traded were alleged to have indulged in manipulation. He further stated that he had already furnished his reply and that his statement was also recorded on March 16, 2004 by the Investigating Authority.
Page 3 of 3 4. Admittedly, the noticee was trading for certain persons through Growever Investment Private Limited in the shares of the company. The noticee was not a sub- broker registered with SEBI during the relevant period when he had traded for the aforesaid persons. A person cannot buy, sell or deal in the securities market as a stock broker or sub-broker without obtaining a certificate of registration as required in terms of Section 12 of the Act and the Broker Regulations. The requirement of registering with SEBI as mandated under law is to ensure that the persons/entities dealing in the securities market are ‘fit and proper’ to undertake such business in the capital market. As the noticee had not obtained the registration during the relevant period, as required, he is guilty of contravening the provisions of Section 12(1) of the Act and Rule 3 of the Securities and Exchange Board of India (Stock Brokers and Sub-brokers) Rules, 1992 (since rescinded) read with Regulation 11(1) of the Securities and Exchange Board of India (Stock Brokers and Sub-brokers) Regulations, 1992. Considering the totality of the facts and circumstances, I dispose of the show cause notice issued to Mr. Sharad B. Shah as ordered hereinbelow.
2. I have considered the show cause notice, the submissions of the noticee and other material available on record. The allegation leveled against the noticee is that he had acted as an unregistered sub-broker on behalf of certain persons namely Mr. Nilesh Bhalerao (company secretary of the company), Mr. Parimal Gole, Mr. Ganesh Pokale and Mr. Hasmukh J. Shah and Mr. Mukund Mulay, while dealing in the shares of the company. It was also found that the noticee had executed the trades for his aforesaid persons on BSE through the sub-broker Growever Investment Private Limited (affiliated to the stock broker, Latin Manharlal Securities Private Limited). The noticee had bought 11,495 shares and sold 2,965 shares on behalf of the aforesaid persons during the relevant period, as per the details given below:
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Source: SecMarx — sebi:WTM/KMA/IVD/241/03/2010. 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.