MO/04/MIRSD/07/05

Securities and Exchange Board of India, Mumbai

Order Against

 

Sunil Kumar Kayan, operating under trade name Sunil Kumar Kayan and Co. with SEBI Registration no. INB030668917, at Kolkata Stock Exchange.

 

under Regulation 13 (4) of SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002

 

 

Whereas, an inspection was initiated by Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’), vide order dated 13.8.03 against Shri Sunil Kumar Kayan, operating under trade name Sunil Kumar Kayan and Co. (hereinafter referred to as `broker’), with SEBI registration no. INB030668917, at Kolkata Stock Exchange.(hereinafter referred as `CSE’), on 13th August 2003, and,

 

whereas an order was passed by SEBI on 20th August 2003 restraining the broker from buying, selling or dealing in securities in any manner, directly or indirectly with immediate effect., pending completion of an inspection and determination of further appropriate action on receipt of the report, and,

 

whereas, on receipt of the inspection report and after giving an opportunity of being heard on 15.9.03, SEBI confirmed the said order on 9th December 2003, pending determination of appropriate action, on receipt of report of the enquiry, and,

 

whereas, an enquiry officer was appointed on 18th December 2003, and after conducting the enquiry in terms of the provisions of  SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002, submitted his report on 28th October 2004 recommending suspension of registration of the broker for a period of one year,

 

whereas a copy of the said Enquiry Report was sent to the broker vide letter dated 4.11.2004 and the broker was given a further opportunity of a personal hearing before me on 17th June 2005 and,

 

whereas the enquiry officer in his report has found that the broker by trading in small quantities in the exchange system used the same as benchmark price to execute large orders outside the exchange in violation of the provisions of Section 19 of SCR Act, 1957 and also the Code of Conduct for the brokers. It was also found that the brokers did not co-operate with the inspection team in furnishing the necessary documents and information and thereby violated SEBI(Stock Brokers & Sub Brokers) Regulations, 1992.

 

whereas, the broker did not dispute the above findings of the enquiry officer, and ,

 

whereas in the context of one of the alleged violation relating to the broker’s acting as an unregistered sub-broker for three members of the National Stock Exchange, Mumbai i.e. GCM Securities Limited, Shri Sanjay Bansal and PKC Stock Broking as evidenced through the trades carried out from the terminals of NSE and the presence of documents relating to these transactions in the brokers premises, the broker was asked by me as to why a penalty of suspension of certificate of registration of the broker for at least a period of two years be not  imposed having regard to the gravity of these charges alone, and,

 

whereas, the broker admitted the execution of the said unauthorized transactions through the terminals of NSE brokers such as PKC Stock Broking etc. but submitted that the penalty of suspension of certificate of registration for a period of two years would be harsh and pleaded for a lenient view stating that registration was already under suspension since August 2003 resulting in substantial losses for him, his record of no regulatory action in the past and no pending investor complaints against him, and,

 

I, having considered the nature and gravity of the charges established, the facts and circumstances of the case, as also the submissions made by the broker and also having taken into account the restrictions imposed on the broker from buying, selling or dealing in securities in any manner, vide order dated 20th August, 2003, and the fact that there is no previous regulatory infraction by the broker, am of the view that ends of justice would be met by treating the aforesaid period of restriction on the business activities of the broker since 20th August 2003 till date, being a period of almost two years, as sufficient penalty.

 

Now, therefore, in exercise of the powers conferred upon me under section 19 of the SEBI Act, 1992, read with Regulation 13(4) of the SEBI (Procedure for holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002, I, hereby direct that the restraint imposed on the broker against buying, selling and dealing in securities, in terms of SEBI’s orders dated 20th August 2003 and 9th December 2003, be revoked with immediate effect and that the broker be set at liberty to trade in securities subject to the conditions for grant of Certificate of Registration, SEBI (Stock Broker and Sub-Brokers) Regulations, 1992, Bye-laws of the Exchange where he is a member, the provisions of Securities Contract (Regulation) Act, 1956 and all other statutory compliances as may be applicable. 

 

 

                                                                                                                     MADHUKAR

 

PLACE : MUMBAI                                                                                  WHOLE TIME MEMBER

 

DATE : JULY 12, 2005                                          SECURITIES AND EXCHANGE BOARD OF INDIA