sebi:WTM/KMA/MIRSD/263/06/2010
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Facts / Headnote
Warning issued to the stock broker; enquiry proceedings disposed of
Provisions invoked
- s. 19
- s. 12(1)
- s. 24(1)
Regulations
- Reg. 28(2)
Parties
- Interface Brokerage and Research Limited
Holding
The stock broker, Interface Brokerage and Research Limited, was found to have contravened SEBI Circulars dated March 14, 1996, January 16, 1998 and January 15, 2001 by dealing for its clients through Pinnacle Finstock Limited on BSE without obtaining a certificate of registration from SEBI, and was warned accordingly.
Full text
Page 2 of 4 the stock broker within the time stipulated in the aforesaid notice, SEBI provided another opportunity to the stock broker to submit its reply, vide letter dated April 20, 2010. Thereafter, the stock broker, vide letter dated April 26, 2010 had sent its reply to the show cause notice dated March 25, 2010 inter alia stating “…….we request your goodself to pursue on our behalf the Whole Time Member to accept the recommendation made by you and if same is found agreeable to accept to the Whole Time Member, considering the facts and circumstances of the matter under enquiry, the said Authority be requested to pass the Order, even without affording us an opportunity of hearing in that regard. The order passed by the Whole Time Member as recommended by your goodself of issuing “Warning” or such other lesser penalty or complete exoneration will be honoured by us in future”. In view of the same, I do not consider it necessary to afford an opportunity of hearing to the stock broker and proceed further in the matter on the basis of the material available on record.
Page 3 of 4 the Bombay Stock Exchange Limited (BSE). In terms of the Circular dated March 14, 1996, SEBI informed the stock exchanges that those who were already in the business of sub-broking and had applied for registration before May 21, 1992 are being advised to re-submit their applications complete in all respects within two months failing which it shall be construed that they are acting as sub-brokers without holding certificates of registration in violation of section 12(1) of Securities and Exchange Board of India Act, 1992 (the SEBI Act) and that the applicants who had applied after May 21, 1992, are being advised to stop the business of sub- broking immediately which can be re-started after they are duly registered with SEBI. In terms of the SEBI Circular dated January 16, 1998, members of the stock exchanges who are acting as sub-brokers through the members of other exchanges were advised to obtain a Certificate of Registration from SEBI to act as a sub-broker under the Securities and Exchange Board of India (Stock Brokers and Sub-brokers) Rules, 1992 and Securities and Exchange Board of India (Stock Brokers and Sub-brokers) Regulations, 1992. Further, in terms of SEBI Circular dated January 15, 2001, stock exchanges were advised to inform all the stock brokers that their sub-brokers are permitted to start business only after clearance and receipt of registration certificate from SEBI and that if any person contravenes or attempts to contravene or abets the contrav
Page 4 of 4 order of “Warning” or such other lesser penalty or complete exoneration in future. In the facts and circumstances of the matter, I am of the view that the recommended penalty would be reasonable in the interest of justice. The present enquiry proceedings is therefore disposed of as ordered hereinbelow.
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Source: SecMarx — sebi:WTM/KMA/MIRSD/263/06/2010. 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.