CO/65/SMD/06/2003
SECURITIES AND EXCHANGE BOARD OF INDIA
ORDER
UNDER REGULATION 16(5) OF SEBI (PROCEDURE FOR HOLDING ENQUIRY BY ENQUIRY OFFICER AND IMPOSING PENALTY) REGULATIONS, 2002, AGAINST H.C. NAGABHUSHANA OF M/s. VIJAI & CO.
1.0 BACKGROUND OF THE CASE :
1.1 Shri H.C. Nagabhushana of M/s. Vijai & Co. (hereinafter referred to as the broker) is a member of Bangalore Stock Exchange (hereinafter referred to as BgSE) and registered with Securities and Exchange Board of India (hereinafter referred to as SEBI) vide registration no. INB080167114.
1.2 An officer was appointed vide Order dated 28.02.2003 to conduct an enquiry into the possible violation of regulation 15 (c) of SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002, (hereinafter referred to as ‘the said Enquiry Regulations’) alleged to have been committed by the broker.
2.0 REPORT OF THE OFFICER AND RECOMMENDATION :
2.1 The officer issued a notice dated 13.03.2003 under regulation 16(2) of the said Enquiry Regulations to the broker stating that the broker has ceased to be a member of the exchange and his registration is liable to be cancelled. It was further stated that if the broker failed to reply to the notice then it would be presumed that the broker has no explanation to offer and matter would be proceeded as per the regulations. However, the member failed to submit any reply to the said notice.
The officer has concluded that the broker has ceased to be a member of the exchange and therefore his certificate of registration as a stock broker is liable to be cancelled under rule 4 (a) of SEBI (Stock Brokers and Sub-Brokers) Rules, 1992 (hereinafter referred to as ‘the said rules’) read with regulation 25 (a) of SEBI (Stock-Brokers and Sub-Brokers) Regulations, 1992 (hereinafter referred to as ‘the said regulations’) and regulation 15 (c) of the said Enquiry Regulations.
3.0 CONCLUSIONS :
3.1 I have perused the Report of the officer dated 29.05.2003 and do not find any reason to differ with the recommendation of the Officer inasmuch as the Bangalore Stock Exchange vide its letter dated 15.05.2002 informed that the broker was declared a defaulter on 31.08.2001 and ceased to be a member of the exchange for non payment of exchange dues. I am also convinced that the notice was duly served upon the broker.
Under Rule 4 (a) of the said Rules, one of the conditions for granting certificate of registration as a stock broker is that the broker should hold the membership of a stock exchange. Under regulation 25 (a) of the said Regulations, a broker is liable for action if he fails to comply with any conditions subject to which registration has been granted. Since the broker ceased to be a member of the exchange as confirmed by the Bangalore Stock Exchange vide its letter dated 15.05.2002, I am fully convinced that the broker has failed to comply with rule 4(a) of the said Rules and is, therefore, liable for action under regulation 25 (a) of the said Regulations read with regulation 15 (c) of the said Enquiry Regulations.
4.0 ORDER :
4.1 Therefore, in exercise of the powers conferred upon me by virtue of sub section (3) of section 4 of the Securities and Exchange Board of India Act, 1992 read with regulation 25 (a) of the said Regulations and also regulation 15(c) and 16(5) of the
said Enquiry Regulations, I hereby order that the certificate of registration no.INB 080167114 of H.C. Nagabhushana of M/s. Vijai & Co., member of the Bangalore Stock Exchange be cancelled with immediate effect.
Place : Mumbai G. N. BAJPAI
Date : 26.06.2003 CHAIRMAN
SECURITIES AND EXCHANGE BOARD OF INDIA