sebi:WTM/VKC/MIRSD/14/06

SEBI · SEBI · 2003-07-24 · V.K. Chopra, Whole Time Member

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Facts / Headnote

Minor penalty of suspension of Certificate of Registration for fifteen days imposed on the sub-broker

Provisions invoked

• s. 19
• s. 12

Regulations

• Reg. 199
• Reg. 13(4)
• Reg. 13(2)
• Reg. 5
• Reg. 17(1)
• Reg. 6(1)
• Reg. 15(B)(2)(c)
• Reg. 17(1)(g)
• Reg. 15(B)(2)

Parties

• M/s. Akriti Securities Pvt. Ltd.

Holding

The Whole Time Member imposed a minor penalty of suspension of the sub-broker's Certificate of Registration for a period of fifteen days for contraventions of SEBI regulations and circulars observed during inspection. The order rejects the sub-broker's contention that SEBI circulars apply only to brokers and not sub-brokers.

Full text

ORDER (UNDER REGULATION 13(4) OF SEBI (PROCEDURE FOR HOLDING ENQUIRY BY ENQUIRY OFFICER AND IMPOSING PENALTY) REGULATIONS, 2002) 1.1 M/s. Akriti Securities Pvt. Ltd. (hereinafter referred to as “the sub-broker”) is a sub-broker affiliated to UPSE Securities Ltd., member of the Stock Exchange, Mumbai and registered with SEBI as a sub- broker under section 12 of SEBI Act, 1992 with SEBI Registration No. INS010751134 and the sub-broker is also a member of the Uttar Pradesh Stock Exchange (“UPSE”). 1.2 Inspection of the books of accounts, documents and other records maintained by the sub-broker for the period commencing from 01.04.2001 to 31.03.2003 was carried out by J.N.Sharma & Co., Chartered Accountants, on behalf of SEBI. Certain irregularities/contraventions of SEBI Regulations were observed during the said inspection. A copy of the findings of the Inspection Report was sent to the sub-broker vide letter dated 24.07.2003 and his comments thereto were received vide reply dated 06.09.2003. 2.0 Enquiry Proceedings 2.1 An Enquiry Officer (EO) was appointed vide SEBI Order dated 09.01.2004 under Regulation 5 of SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 (hereinafter referred to as ‘said regulations’) to enquire into the alleged contraventions observed during the inspection of books of accounts of the sub-broker. 2.2 A show cause notice dated 22.07.2004 in terms of Regulation 6(1) of the said Regulations was issued to the sub-br

2.3 As per the request of the sub-broker, an opportunity of personal hearing was given to the sub-broker by the EO on 30.08.2004 which was attended by Mr. Kumar Anand Agarwal, Director of the sub-broker, who made oral submissions reiterating the written submissions. 2.4 The EO after conducting the enquiry in terms of the said regulations submitted his report on 30.11.2004 recommending a penalty of suspension of the registration of the sub-broker for a period of one year. 3.0 Show cause notice and the sub-broker’s submission 3.1 A copy of the Enquiry Report was sent to the sub-broker along with a show cause notice dated 06.12.2004, in terms of Regulation 13(2) of the said regulations, advising the sub-broker to show cause as to why the appropriate

trading rights as broker of UPSE and also to resign its trading rights as sub- broker affiliated through UPSE Securities Ltd, member of Stock Exchange, Mumbai and enclosed all the relevant documents along with the Board Resolution dated 02.08.2006. It further submitted that its reply dated 25.05.2005 may be treated as their final submission. It further submitted that it is in the process of final and complete exit from the Stock broking/sub-broking activities. The sub- broker further requested to take into consideration a genuine intention and operations to deliver its duties as sub-broker and not to impose any penalty. 4.0 Consideration of issues 4.1 I have carefully examined the facts and circumstances of the case, the inspection report, the enquiry report and the submissions of the sub-broker thereto and my

Source: SecMarx — sebi:WTM/VKC/MIRSD/14/06. 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.