sebi:WTM/KMA/MIRSD/22/12/2008
Facts / Headnote
Enquiry proceedings disposed of without imposing any further penalty
Provisions invoked
- s. 19
- s. 12
Regulations relied on
- SEBI (Intermediaries) Regulations, 2008
- SEBI (Stock Brokers) Regulations, 1992
Parties
- M/s Vidhyut B. Shah (Registration No.INB020125315), Member, Ahmedabad Stock Exchange Limited
Holding
The enquiry proceedings against the stock broker were disposed of without imposing any further penalty, as the broker had already paid a penalty of Rs. 1,00,000/- imposed by the Adjudicating Officer for the same set of violations.
Full text
Page 2 of 5 future. Pursuant to the submission of the Enquiry Report, a show cause notice dated January 18, 2005 was issued by SEBI to the Broker along with a copy of the Enquiry Report. Though, the said notice was delivered to the Broker, he failed to file any reply. The Broker was also granted an opportunity of hearing, by SEBI, on November 29, 2006. The said hearing could not take place, as the Broker, vide letter dated November 25, 2006 had requested SEBI for the postponement of the matter. As SEBI had not received any reply from the Broker to the above mentioned show cause notice, another opportunity was granted to the Broker, to submit its reply by September 16, 2008. The Broker chose not to respond to the said letter. Thereafter, another opportunity of hearing was given to the Broker, by SEBI on December 17, 2008. In the meanwhile, the Broker, vide letter dated December 8, 2008 inter alia stated on the basis of the aforesaid inspection report, SEBI had also initiated adjudication proceedings under Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 (hereinafter referred to as the said Rules) and the present enquiry proceedings under Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 (hereinafter referred to as the said Regulations). He contended that the charges leveled against him are same under both the proceeding
Page 3 of 5 before me on the date of hearing. In the facts and circumstances, I do not consider it necessary to give another opportunity to the Broker.
Page 4 of 5 February 11, 1997. In its circular dated April 11, 1997, SEBI had further advised that the stock brokers might seek additional information, if any, so as to satisfy themselves about the antecedents of clients and that it would be the responsibility of the stock brokers to provide for client details as and when need arises. The said requirements had been made in compliance of the Know Your Clients (KYC) norms. It is one of the mandatory duties of a stock broker to ensure that he fulfils the primary requirement of obtaining documents such as client registration forms, member client agreements etc. as required under the aforesaid circular. The Enquiry Officer in his report categorically observed that the Broker violated the provisions of SEBI Circular dated April 11, 1997. The Broker did not dispute the said findings. Even, the established violation observed by the Enquiry Officer in respect of the charge of dealing as unregistered sub broker, was not disputed by the Broker. The Enquiry Officer elaborately explained the basis of his findings in respect of the said charge. Further, the Broker in his wisdom chose not to dispute the said findings. Therefore, I do not consider it necessary to reiterate the instances of violation with regard to the charge of dealing as unregistered sub broker. In the facts and circumstances, I do not have any hesitation to hold that the Broker violated the provisions of Section 12 of the Act read with Rule 3 of Securities and Exchange Boa
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Source: SecMarx — sebi:WTM/KMA/MIRSD/22/12/2008. 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.