sebi:WTM/KMA/NRO/IVD/229/02/2010
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Facts / Headnote
Certificate of registration of the stock broker suspended for five months
Provisions invoked
- s. 19
Regulations
- Reg. 4
- Reg. 4(a)
- Reg. 28(2)
- Reg. 38
Parties
- Esha Securities Limited
Holding
The stock broker Esha Securities Limited was held to have violated Regulation 4(a), (b) and (c) of the PFUTP Regulations and Clauses A(1) to A(5) of the Code of Conduct under Schedule III of the Broker Regulations, and its certificate of registration was suspended for five months. The contention that the supplementary show cause notice was bad in law and that the Intermediaries Regulations, 2008 were inapplicable was rejected.
Full text
Page 2 of 12 to as the PFUTP Regulations) and Clauses A(1) to A(5) of the Code of Conduct specified for stock brokers under Schedule III of the Securities and Exchange Board of India (Stock Brokers and Sub-brokers) Regulations, 1992 (hereinafter referred to as the Broker Regulations). Thereafter, SEBI appointed an Enquiry Officer, vide order dated August 24, 2004 in terms of the provisions of Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 (since repealed) to enquire into the alleged violations committed by the Broker. The Enquiry Officer submitted the Report dated May 31, 2005 recommending the suspension of the certificate of registration of the Broker for a period of four months. The Enquiry Officer found that the Broker had violated Regulation 4(a), 4(b) and 4(c) of the PFUTP Regulations and Clauses A(1) to A(5) of the Code of Conduct specified for stock brokers under Schedule III of the Broker Regulations. The Enquiry Officer also found that the Broker guilty of violating SEBI Circulars dated March 14, 1995 and August 5, 1996.
Page 3 of 12 why a higher penalty than that was recommended by the Enquiry Officer and penalty as considered appropriate by SEBI should not imposed against it. As the Broker had not submitted any reply to the said show cause notice, a reminder was sent by SEBI on October 27, 2009. Thereafter, the Broker, vide letter dated October 30, 2009 inter alia stated that the show cause notice dated September 24, 2009 was without any authority of law and in violation of the principles of natural justice. The Broker further stated that it had purchased the shares of the company on account of its own investments and for its clients. It added that the submissions made by its director before my predecessor was on account of his depression. The Broker contended that the Intermediaries Regulation cannot be made applicable to the present case, where the investigation and ‘adjudication’ process have been completed under the provisions of the Enquiry regulations. Subsequently, an opportunity of hearing was granted to the Broker on December 18, 2009. Though, the said letter was acknowledged by the Broker, it failed to appear for the hearing. Thereafter, the Broker vide letter dated December 18, 2009 informed that Mr. Raj Kumar Kedia, Director was under depression and unable to appear before me. It was stated that they had already given their submissions, vide their letter dated October 30, 2009 and do not want to make any additional submissions.
Page 4 of 12 and Moongipa Securities Limited had entered into a number of synchronized/structured deals in the shares of the company during the relevant period, as given below:
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Source: SecMarx — sebi:WTM/KMA/NRO/IVD/229/02/2010. 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.