sebi:WTMN/14/MIRSD/6/04

SEBI · SEBI · 2003-12-26 · T. M. Nagarajan, 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

Certificate of registration No. INB 200819938 granted to Navketan Merchants Ltd. cancelled with immediate effect.

Provisions invoked

• s. 19
• s. 24

Regulations

• Reg. 13
• Reg. 27
• Reg. 13(1)
• Reg. 15(c)
• Reg. 16
• Reg. 13(6)
• Reg. 25
• Reg. 16(5)
• Reg. 2

Parties

• Navketan Merchants Ltd.

Holding

The certificate of registration No. INB 200819938 granted to Navketan Merchants Ltd. as a stock broker is cancelled with immediate effect, as the broker ceased to be a member of a recognized stock exchange (OTCEI) and thereby violated a condition of its registration.

Full text

Home » Enforcement » Orders » Orders of Chairman/Members Enforcement Enforcement▼ ORDER Order under Regulation 16(5) and 13(1)(b) of the of Securities and Exchange Board of India (Procedure for holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 in the matter of enquiry against Navketan Merchants Ltd., erstwhile member of OTCEI and stock broker registered with SEBI. WTMN/14/MIRSD/6/04 1.0 Navketan Merchants Ltd. (hereinafter referred to as “the said broker”) was a member of OTC Exchange of India (hereinafter referred to as “OTCEI”) and a stock broker registered with the Securities and Exchange Board of India (hereinafter referred to as “SEBI”) under certificate of registration No. INB 200819938. 2.0 OTCEI, vide its letter dated 26.12.03, informed SEBI that they had expelled the said broker w.e.f. 22.12.03 and it ceased to be a member of OCTEI w.e.f. 22.12.03. 2.1 In view of the above, SEBI, vide order dated 21.01.04 appointed an Enquiry Officer under the SEBI (Procedure for holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 (hereinafter referred to as “Enquiry Regulations”) to hold an enquiry under Chapter III of the Enquiry Regulations. 2.2 The Enquiry Officer, acting in accordance with regulation 16 (2) of the Enquiry Regulations issued show cause notice to the said broker on 08.03.04 advising it to show cause why its registration as a stock broker should not be cancelled. The said broker failed to reply to the said show cause

2.0 OTCEI, vide its letter dated 26.12.03, informed SEBI that they had expelled the said broker w.e.f. 22.12.03 and it ceased to be a member of OCTEI w.e.f. 22.12.03. 2.1 In view of the above, SEBI, vide order dated 21.01.04 appointed an Enquiry Officer under the SEBI (Procedure for holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 (hereinafter referred to as “Enquiry Regulations”) to hold an enquiry under Chapter III of the Enquiry Regulations. 2.2 The Enquiry Officer, acting in accordance with regulation 16 (2) of the Enquiry Regulations issued show cause notice to the said broker on 08.03.04 advising it to show cause why its registration as a stock broker should not be cancelled. The said broker failed to reply to the said show cause notice. 2.3 Thereafter, on 21.04.04, the Enquiry Officer submitted his report. In his report the Enquiry Officer observed that OTCEI had expelled the said broker w.e.f. 22.12.03. Therefore, the Enquiry Officer has recommended cancellation of the certificate of registration granted to the said broker, as the said broker ceased to be a member a recognized stock exchange. 2.4 I note that adequate opportunity had been given to the said broker in terms of Regulation 16 of the Enquiry Regulations and that it has chosen not to avail such opportunity. Therefore, I am satisfied that the requirements of natural justice have been fulfilled and I proceed further in the matter. 3.0 I have considered the facts of the matter, report

(a) he holds the membership of any stock exchange; (b) … (c) … (d) … (e) …” 3.1.4 I note that the Enquiry Officer in his report has found that the said broker ceased to be a member of OTCEI w.e.f. 22.12.03, hence its certificate is liable to be cancelled. 3.1.5 In view of the above, I agree with the findings of the Enquiry Officer and find that the said broker has violated one of the conditions subject to which registration has been granted to him viz. that it shall be a member of a recognized stock exchange. 3.2 I note that Regulation 25 of the broker regulations provides that : “Liability for contravention of the Act, rules or the regulations.

Source: SecMarx — sebi:WTMN/14/MIRSD/6/04. 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.