Order against V U Securities Pvt Ltd

 

SECURITIES AND EXCHANGE BOARD OF INDIA

ORDER

 

 Whereas, Securities and Exchange Board of India ( hereinafter referred to as SEBI ) conducted an inspection of the books of accounts and other documents of M/s. V & U Securities Pvt. Ltd., a sub-broker, affiliated to ASE Capital Markets Ltd., Member- The Stock Exchange, Mumbai (hereinafter referred to as “sub-broker”) into the alleged violations of provisions of Securities and Exchange Board of India Act, 1992 (hereinafter referred to as “SEBI Act”), Rules, Regulations and Circulars made there under. The inspection revealed various irregularities and violations to have been committed by the sub broker including those of irregularities in issuance of confirmation memos; deficiencies in the maintenance of clients’ agreements & registration forms, execution of transactions for the clients before obtaining client registration forms, dealing with unregistered sub brokers and dealing with a client who is a defaulter; and

 

 Whereas vide order dated January 07, 2004 an Enquiry Officer was thus appointed by SEBI under Regulation 5 of SEBI (Procedure for holding enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 (hereinafter referred to as “Enquiry Regulations”) to enquire into the alleged contravention of SEBI Act, Securities Contract (Regulation) Rules, 1957, SEBI (Stock Brokers & Sub-Brokers) Regulations, 1992 (hereinafter referred to as “Broker Regulations”), SEBI (Stock Brokers & Sub-Brokers) Rules, 1992 (hereinafter referred to as “Broker Rules”), SEBI Circulars, Bye-laws, Business Rules & Regulations of the Stock Exchange; and,

 

whereas, the Enquiry Officer after conducting the enquiry in terms of the Enquiry Regulations and while finding that in the facts and circumstances of the case and the reply of the sub broker, albeit the charge of dealing with unregistered sub broker against it can not sustain, concluded that the sub broker by not properly maintaining confirmation memos, client registration forms and entering into transactions with the clients before obtaining the client registration forms is guilty of violating the provisions of SEBI Circular No. SMD / Policy / Circular-11 / 97 dated May 21 , 1997 and also observed that the sub broker by providing trading terminals to unregistered entities is guilty of violating the provisions of the aforesaid Circular; and

 

whereas, the Enquiry Officer further observed that the sub broker by continuing to deal with another broker Mathur Shares & Stocks Ltd., member of ASE who was declared a defaulter is guilty of violation of the provisions of A(2) of the code of conduct prescribed under Schedule II of SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992 for violating Rule 8(1) (f) of Securities Contract (Regulation) Rules, 1957 and recommended a minor penalty of censure against sub broker vide his Enquiry Report dated October 28, 2004; and

 

whereas, a copy of the said Enquiry Report was forwarded to the sub broker along with a show cause notice dated November 04, 2004 advising it to show cause as to why appropriate penalty including penalty as recommended by the Enquiry Officer should not be imposed on it ; and whereas, the sub broker did not reply to the said show cause notice inspite of its receipt and therefore I am proceeding in the matter on the basis of the material available on record; and

 

whereas, from the reply given by the sub broker to the Enquiry Officer and also during the hearing before the Enquiry Officer, I note that the sub broker did not offer any satisfactory reply to the charges levied against it; and

 

whereas, I also observe that the enquiry officer having considered the submissions of the sub broker, has recommended the minor penalty of censure against the sub broker.

 

Now, therefore,

 

I, having considered the nature and gravity of the charges established, the facts and circumstances of the case, the submissions made by the broker , the recommendations of the Enquiry Officer and the mitigating factors as explained above, while agreeing with the findings of the Enquiry Officer, in exercise of powers conferred under Section 19 of the SEBI Act , read with Regulation 13(4) of SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulation 2002, hereby censure M/s. V & U Securities Pvt. Ltd., a sub-broker bearing registration No. INS 010661812, affiliated to ASE Capital Markets Ltd., member-BSE and advise it to be careful in future in its dealings in the securities market and diligently adhere to the provisions of the SEBI Act,1992, the Regulations and Circulars made there under.

DATE : 30/12/2005

PLACE: MUMBAI

MADHUKAR

WHOLE TIME MEMBER

SECURITIES AND EXCHANGE BOARD OF INDIA