sebi:WTM/KMA/IVD/313/11/2010
Facts / Headnote
Certificate of registration of Amrut Securities Limited as sub-broker suspended for a period of five days
Provisions invoked
- s. 19
- s. 12
Regulations relied on
- SEBI (Intermediaries) Regulations, 2008 — 28(2)
- SEBI (PFUTP) Regulations, 1995 — 4(a)
- SEBI (Stock Brokers) Regulations, 1992 — 3
Parties
- Amrut Securities Limited
Holding
Amrut Securities Limited's certificate of registration as sub-broker, Registration No. INS 010581937, was suspended for five days for acting as an unregistered sub-broker of Galaxy Broking Limited on August 16 & 17, 2000 in violation of Section 12 of the Act and Rule 3 of the said Rules.
Full text
Page 2 of 5 Securities and Exchange Board of India Act, 1992 (hereinafter referred to as the Act) read with Rule 3 of the Securities and Exchange Board of India (Stock Brokers and Sub-brokers) Rules, 1992 (since rescinded). During the period of investigation, Amrut Securities Limited (hereinafter referred to as ASL) was also a sub broker affiliated to SKSE Securities Limited for trading in the Bombay Stock Exchange Limited. The Designated Authority (hereinafter referred to as the Enquiry Officer), vide report dated October 26, 2009, while recommending the suspension of the certificate of registration for a period of one month, found that ASL had violated Section 12 of the Act and Rule 3 of the Securities and Exchange Board of India (Stock Brokers and Sub-brokers) Rules, 1992 (hereinafter referred to as the said Rules). The Enquiry Officer also observed that the allegation of violations of the PFUTP Regulations does not stand established.
Page 3 of 5 an opportunity of hearing was granted to ASL on October 13, 2010, wherein, Ms. Vasanti Nagda, as authorized by ASL represented it before me. She admitted that ASL had acted as an unregistered sub broker of Galaxy Broking Limited during the period of investigation and further submitted that ASL had volunteered to undergo suspension of its certificate of registration as a sub broker of SKSE Securities Limited. The representative also requested to conclude the present proceeding as ASL would withdraw its consent application pending disposal by SEBI. Accordingly, ASL, vide letter dated October 13, 2010 informed SEBI that it was willing to withdraw its consent application in the matter. In view of the same, I proceed to consider the present proceedings on merits treating the consent application as withdrawn.
Page 4 of 5 4. It is mentioned in the Enquiry Report that the aforesaid transactions had been admitted by ASL, vide an electronic mail dated October 7, 2009. In terms of Section 12 of the Act, no sub-broker shall deal as such without the grant of certificate of registration. Rule 3 of the said Rules also demand the same. Further, SEBI, vide circular dated January 16, 1998 has mandated that the members of one stock exchange desirous of dealing through members of another stock exchange have to necessarily register themselves as sub-brokers before dealing with them. Admittedly, the said compliance was not made by ASL before dealing as a sub-broker and the same was clearly in contravention of the provisions of Section 12 of the Act and Rule 3 of the said Rules, as found of the Enquiry Officer. Such serious irregularities threaten the integrity and the orderly development of the securities market and call for regulatory intervention to protect the interest of investors. No one can be allowed to break the laws governing its activities in the securities market with impunity. The entity which violated the law in the present case is a securities market intermediary. It is all the more necessary for such intermediary to comply the norms relating to the securities market. SEBI is duty bound to penalize such erring intermediaries for maintaining the safety and integrity of the securities market. Thus, I concur with the findings and recommendation of the Enquiry Officer. I note that, SEBI
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Source: SecMarx — sebi:WTM/KMA/IVD/313/11/2010. 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.