sebi:WTM/RKA/ID-6/10/2013
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Facts / Headnote
SCN disposed of without serious enforcement action; violation of Clause A(2) found but no penalty beyond warning/disposal
Regulations
- Reg. 7
- Reg. 25
- Reg. 27
- Reg. 28(1)
- Reg. 38
Holding
The noticee violated clause A(2) of the Code of Conduct for stock brokers read with regulation 7 by allowing MLD to act as unregistered sub-broker and knowingly accepting third-party delivery, while the charges of non-genuine trades under clauses A(1) and D(4) were not established, and the SCN was disposed of without serious enforcement action.
Full text
Page 2 of 6 (MLD). Shree Balaji and GKK dealt in the scrip on behalf of Mr. Khetrapal and Vincomp and MLD dealt on behalf of Mr. Dhody and his company 21st Century Media. While Shree Balaji was a registered stock broker, GKK and MLD dealt on behalf of their clients without being registered as sub-broker of the noticee. It was thus, alleged that noticee allowed its clients to act as unregistered sub-brokers.
Page 3 of 6 2008 (hereinafter referred to as "Intermediaries Regulations").The DA submitted her Report dated October 29, 2010, in accordance with the provisions of the Intermediaries Regulations. In the report, the DA found that the charge, that the noticee carried out transactions which were not genuine, did not stand and allegation that the noticee violated clauses A(1) and D(4) of the Stock Brokers Regulations was not established. However, the DA found that the noticee allowed its clients to act as unregistered sub-broker and knowingly allowed third party delivery against the pay-in obligations of its client. In this regard, the DA found that the noticee has violated the provisions of clause A (2) of the code of conduct for stock brokers as specified under Schedule II read with regulation 7 of the Stock Brokers Regulations and recommended that the noticee may be warned in terms of regulation 27(vi) of the Intermediaries Regulations.
Page 4 of 6 7. An opportunity of personal hearing was granted to the noticee on September 16, 2011 before the then Whole Time Member which the noticee had not availed despite receipt of the notice dated July 20, 2011 in that regard. Another opportunity of personal hearing was granted to the noticee on December 20, 2012 before me. The noticee, vide its letter dated December 15, 2012 and e-mail dated December 16, 2012 made further submissions. While reiterating its earlier reply, the noticee submitted that it had adequately replied to the SCN and the matter does not warrant increase of penalty although the DA had already recommended 'warning'. The noticee has further requested that the matter may be closed with the 'warning' already given by the DA which is sufficient for the cause. Vide email dated December 16, 2012, the noticee conveyed that it did not wish to attend the personal hearing in the matter.
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Source: SecMarx — sebi:WTM/RKA/ID-6/10/2013. 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.