sebi:WTM/TCN/119/IVD2/Jan/09

SEBI · SEBI · 2004-07-16 · Dr. T.C. Nair, Whole Time Member

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

Censure with direction to be cautious in future

Provisions invoked

• s. 19
• s. 12

Regulations

• Reg. 13
• Reg. 6
• Reg. 28(2)

Parties

• Shri Parshwa Finance

Holding

Shri Parshwa Finance was censured for acting as an unregistered sub-broker of P Suryakant Shares & Stock Brokers Pvt. Ltd. in violation of Section 12 of the SEBI Act, 1992, while the charge of collusion in dealing in fraudulently issued shares of AEL under the PFUTP Regulations was not established.

Full text

2 Unfair Trade Practices relating to Securities Market) Regulations, 1995 (hereinafter referred to as “PFUTP Regulations”). It was also alleged that the sub broker has dealt as an unregistered sub broker in violation of the provisions of section 12 of SEBI Act, 1992.

3 certificate dated February 5, 2001 with the broker Jyotish Bhogilal Stock Brokers Pvt. Ltd. Therefore prior to the date of dealings in the scrip in question, the sub broker had been registered with SEBI. Hence it cannot be said that it had acted as an unregistered sub broker. It further submitted that the sub broker obtained another certificate of registration dated February 13, 2002 since it has stopped its transactions with broker Jyotish Bhogilal Stock Brokers Pvt. Ltd. and wanted to deal with P. Suryakant Share. The sub broker contended that neither the Act not the Rules and Regulations framed thereunder require that the sub broker need to obtain different certificates of registration for dealing with different brokers. Therefore it cannot be said that the sub broker had acted as unregistered sub broker and hence violated the provisions of SEBI act, Rules and Regulations.

4 broker was registered with the broker P Suryakant Shares & Stock Brokers Pvt. Ltd. much later, i.e. in February 2002 whereas it had executed trades on behalf of clients even prior to getting registered as sub broker to P Suryakant Shares. As per the statement of P Suryakant, BSE had already imposed a penalty of Rs. 25,000 on it for trading with an unregistered sub-broker i.e. Parshwa Finance. The broker P Suryakant had mostly delivered/received shares to/from the account of sub broker Shri Parshwa Finance for the trades of its clients. The payment was also made through account payee cheques favoring the sub broker. For pay-in obligation of the broker P Suryakant in settlement nos. 2001010 to 2001014, it had received shares to its pool account from the demat account of sub broker Shri Parshwa Profin P Ltd. (Director: Shri Piyush Jhaveri), which was not registered with the member as a sub-broker at that point of time.

Source: SecMarx — sebi:WTM/TCN/119/IVD2/Jan/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.