sebi:WTMO/28/MIRSD/3/04

SEBI · SEBI · 2003-08-26 · 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

Certificates of registration No.INB230930334 and INF230930334 cancelled with immediate effect

Provisions invoked

• s. 19

Regulations

• Reg. 13
• Reg. 15
• Reg. 16(5)
• Reg. 25

Parties

• Acumen Securities Ltd.

Holding

The broker, having been expelled from NSE membership, ceased to comply with Rule 4(a) of the SEBI (Stock Broker and Sub Broker) Rules, 1992, a condition of its registration, and therefore its certificates of registration were cancelled as a major penalty.

Full text

Page 2 of 4 2.2 In her report, the designated officer has found that the said broker was expelled by NSE from its membership on 1.7.2003 for being declared as a defaulter. The designated officer has also mentioned in her report that the show cause notice dated 26.8.2003 issued to the said broker to their address as per records available with SEBI came back with the notings “shifted”. The show cause notice was sent again to a fresh address provided by NSE and the same was received. However, the said broker failed to make any submissions before the designated officer. The designated officer has also observed that the said broker having been expelled from the membership of NSE has violated one of the conditions subject to which registration has been granted to them as a stock broker viz. that they should hold membership of a recognized stock exchange (per Rule 4(a) of the SEBI (Stock Broker and Sub Broker)Rules, 1992 (hereinafter referred to as “the broker rules”). The designated officer has therefore recommended that the certificate of registration granted to the said broker be cancelled. 3.0 Consideration of issues 3.1 I have considered the facts of the matter, the report of the designated officer and other material on record. The following issues arise for consideration : 3.1.1 Whether the said broker has violated one of the conditions subject to which registration has been granted to them as a stock broker. 3.1.1.1 I note that the said broker has been expelled from the membe

Page 3 of 4 “Conditions for grant of certificate to stock broker 4. The Board may grant a certificate to a stock broker subject to the following conditions, namely:- (a) he holds the membership of any stock exchange… … ” 3.1.1.3 In view of the above, I find that the said broker, having ceased to be a member of NSE has also ceased to comply with one of the conditions subject to which registration was granted to them as a stock broker. 3.1.2 Whether the certificates of registration granted to the said broker are liable to be cancelled. 3.1.2.1 I note that Regulation 25 of the SEBI (Stock Broker & Sub Broker) Regulations, 1992 provides that: “Liability for action in case of default

Page 4 of 4 regulation provides that major penalty may be issued only under circumstances prescribed therein one of which is that the intermediary is guilty of violations of the conditions of registration. 3.1.2.3 I further note that Regulation 15 (c) of the enquiry regulations provide that it shall not be necessary to hold an enquiry where the intermediary being a stock broker ceases to be a member of a recognized stock exchange or has been declared a defaulter in relation to transactions at such exchange. 3.1.2.4 I have already found in Para 3.1.1 that the said broker has ceased to be a member of NSE and that thereby they no longer comply with one of the conditions of registration. In view of the above, I find that a major penalty of cancellation of the certificate of registration is liable to be imposed on the said broker. 4.0

Source: SecMarx — sebi:WTMO/28/MIRSD/3/04. 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.