sebi:WTM/TCN/MIRSD/56/11/06

SEBI · SEBI · 2003-03-28 · Dr. T.C. Nair, Whole Time Member

Reviewed by Varun Matlani, Advocate — Securities Lawyer practicing in SAT and SEBI

Facts / Headnote

Guilty on multiple charges; minor penalty of suspension of certificate of registration for three months imposed

Provisions invoked

• s. 19
• s. 12

Regulations relied on

• SEBI (Enquiry & Penalty) Regulations, 2002
• SEBI (Stock Brokers) Regulations, 1992

Parties

• M/s Mitra Options and Share Brokers Ltd.

Holding

The broker was held guilty on numerous charges including failure to distinguish own and client transactions in registers, acting as unregistered sub-broker, misutilizing client funds, unauthorized cash withdrawals/deposits, improper client registration, and maintaining running accounts. A minor penalty of suspension of the certificate of registration for three months was imposed.

Full text

Home » Enforcement » Orders » Orders of Chairman/Members Enforcement Enforcement▼ Order of Mitra Options and Share Brokers Ltd Nov 02, 2006 | Orders : Orders of Chairman/Members SECURITIES AND EXCHANGE BOARD OF INDIA CORAM: DR.T.C.NAIR, WHOLE TIME MEMBER IN THE MATTER OF M/S MITRA OPTIONS AND SHARE BROKERS LTD. MEMBER , NATIONAL STOCK EXCHANGE SEBI REGISTRATION NO. INB 230950637 WTM/TCN/MIRSD/56/11/06 15081 24 9 1. 2. 3. 4. 5. 6. 7. 1

2.1 I have carefully considered the Inspection Report, Enquiry Report, Show Cause Notice to the broker  and its replies dated May 20, 2004, Ma 2004, May 24, 2004 June 17, 2004, June 30, 2004 and July 03, 2004, oral submissions made during personal hearing dt. October 12, 2004 a written submissions dated October 26, 2004. My findings are as under : 2.1.1       As regards the allegation that the register maintained by the broker did not distinguish clearly between broker’s own transactions and transa on behalf of its clients, the broker stated that there was an inspection conducted by NSE during January 2001. Similarly, it was stated th Statutory Audit and Tax Audit for the year ending 31.03.2000 was also conducted during August 2000 and September 2000 respectively, w all the documents were provided to the concerned and no query was raised by them in this regard. I agree with the views of the EO th documents as required by SEBI are different from documents required for Statutory Audit and Tax Audit. The main thrust of SEBI requirem on disclosures and investor protection. Therefore, it is necessary for the broker to satisfy the inspection team as to the requirement of main registers as per the SEBI requirements / Regulations. In light of this, I agree with the findings of the EO and hold the broker guilty on this cou 2.1.2       With regard to the charge that the broker failed to enter transactions which were executed on other stock exchanges in the sauda book, the stated that t

note that there are no specific guidelines stipulating the procedure of delivery and records maintenance. Securities delivered by the clie physical form are required to be accompanied by the transfer deed which evidences the name of the client, ownership etc. and is signed client. In case of market delivery, the transfer deed would be containing the details of the ownership of the shares and a trail is maintain distinctive numbers and the broker’s stamp. Inward memos being prepared by the brokers after clients deliver the securities need not be signature of the clients nor is there a requirement to this effect. 2.1.9 With regard to the allegation that outward memos are not serially numbered, the broker replied that the said memos were generated fro accounting software in respect of physical securities. He stated that the numbering on the outward memos is as per the system package. were 6 such instances mentioned in the show cause notice. The broker stated that they were maintaining scripwise, clientwise records securities for every settlement. The broker further stated that they obtained the signature of the clients after giving delivery of securities an delivery is given within the stipulated time. Broker has contended that there may be following reasons for delay in delivery:

Source: SecMarx — sebi:WTM/TCN/MIRSD/56/11/06. 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.