sebi:WTM/MSS/MIRSD-2/30/09
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Facts / Headnote
Ad interim ex-parte directions restraining the sub-broker from buying, selling or dealing in the securities market; order treated as show cause notice with 15 days to respond
Provisions invoked
- s. 19
Regulations
- Reg. 4
- Reg. 15
- Reg. 16
- Reg. 21(1)
- Reg. 2
- Reg. 12A
- Reg. 35
Parties
- Shri Bhadresh Sanghvi (Trade Name: Arihant Investment)
Holding
The sub-broker, Shri Bhadresh Sanghvi (Arihant Investment), is restrained from buying, selling or dealing in the securities market in any manner whatsoever, and depositories NSDL and CDSL are directed not to give effect to any debit instruction in his or beneficial owners' demat accounts on the authority of power of attorney obtained by him.
Full text
Page 2 of 4 transactions executed outside the trading system. Some trades, which were executed in the name of one person at the Exchange, were recorded in the name of another person in the Kacha papers. (c) Contract notes were issued to the clients in a format different from that prescribed by the exchanges and further, the contract notes so issued did not carry the signature of trading member / authorized signatory. (d) The office did not display SEBI registration certificate of the broker or the sub- broker. It rather displayed a sign board as “Arihant Investment – Member of BSE & NSE”, while it was not a Member of BSE or NSE. This location of the sub-broker was not notified to the Exchange. (e) Mr. Bhadresh Sanghvi, who was operating IML Terminal, did not have the required Certification. (f) Despite being a registered sub broker of NSE, Mr. Bhadresh Sanghvi dealt with another broker (Nirmal Bang Securities Ltd.) for his own trades without prior permission of the exchange. Based on the above findings, the joint inspection prima facie revealed that the sub- broker engaged in transactions outside the trading system of the exchanges and, therefore, concluded that the sub-broker indulged in illegal trading, as alleged by the complainant, besides committing several other irregularities as stated above.
Page 3 of 4 as well as the code of conduct prescribed for sub-brokers in Schedule II read with regulation 15 of Broker Regulations. 4.3 by issuing contract notes, which it is not authorized to do so under the law, it violated clause B (2) of the code of conduct prescribed under schedule II read with regulation 15 of Brokers Regulations and SEBI Circular MIRSD/DPS-1/CIR-31/2004 dated August 26,
Page 4 of 4 whatsoever or accessing the securities market, directly or indirectly, either for himself or for his clients. (b) That the depositories, National Securities Depository Ltd. and Central Depository Services (India) Ltd. shall not give effect to any debit instruction in demat accounts of the sub-broker (Shri Bhadresh Sanghvi or Arihant Investment) or in the demat accounts of any beneficial owner on the authority of power of attorney obtained by the sub-broker.
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Source: SecMarx — sebi:WTM/MSS/MIRSD-2/30/09. 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.