adjudication order in respect of anand rathi financial services ltd. · 2018. 8. 16. · m/s anand...

of 38

BEFORE THE ADJUDICATING OFFICER

SECURITIES AND EXCHANGE BOARD OF INDIA

[ADJUDICATION ORDER NO. PB/AO-91/2011]

__________________________________________________

UNDER SECTION 15-I OF SECURITIES AND EXCHANGE BOARD OF

INDIA ACT, 1992 and SECTION 19 H (1) OF THE DEPOSITORIES ACT,

1996 READ WITH RULE 5 OF SEBI (PROCEDURE FOR HOLDING

INQUIRY AND IMPOSING PENALTIES BY ADJUDICATING OFFICER)

RULES, 1995 AND RULE 5 OF DEPOSITORIES (PROCEDURE FOR

HOLDING INQUIRY AND IMPOSING PENALTIES BY ADJUDICATING

OFFICER) RULES, 2005

In respect of

M/s Anand Rathi Financial Services Limited

Broker BSE-SEBI Registration No. INB 11121754

Broker NSE- SEBI Registration No. INB231121733

DP-CDSL-SEBI Registration No. IN-DP-CDSL-04-99

(PAN: AABCA3577G)

FACTS OF THE CASE IN BRIEF

1. Securities and Exchange Board of India (hereinafter referred to as

“SEBI”) conducted an inspection of books and records of M/s. Anand

Rathi Financial Services Limited (hereinafter referred to as

‘ARFSL/you/Noticee’) Member, Bombay Stock Exchange (hereinafter

referred to as ‘BSE’), National Stock Exchange (hereinafter referred to

as ‘NSE’) and Central Depository Services (India) Ltd. (hereinafter

of 38

referred to as ‘CDSL’) during July 06, 2009 to July 10, 2009 for the

period April 01, 2007 to March 31, 2009.

2. The inspection team observed certain deficiencies in the functioning of

ARFSL including (a) non delivery of contract notes to the clients in

respect of bounce ECNs, (b) not having the adequate system in place

to check receipt of third party cheques, (c) not followed account

opening process properly and discrepancies in KYC account opening

form, (d) discrepancies in processing of Delivery Instructions Slips and

(e) delay in dispatch of physical documents to Issuer/Registrar and

Transfer Agent and rejection of demat requests due to ARFSL’s

mistake. Therefore, it was alleged that ARFSL had violated the

provisions of SEBI (Stock Brokers and Sub Brokers) Regulations, 1992

(hereinafter referred to as ‘Brokers Regulations’), SEBI (Depositories

and Participants) Regulations, 1996 (hereinafter referred to as ‘DP

Regulations’) and certain SEBI Circulars and consequently, liable for

monetary penalty under sections 15F and 15HB of the Securities and

Exchange Board of India Act, 1992 (hereinafter referred to as the

‘SEBI Act’) and section 19G of Depositories Act, 1956 (hereinafter

referred to as ‘DP Act’).

APPOINTMENT OF ADJUDICATING OFFICER

3. The undersigned has been appointed as Adjudicating Officer under

section 15 I of the SEBI Act read with rule 3 of SEBI (Procedure for

Holding Inquiry and Imposing Penalty by Adjudicating Officer) Rules,

1995 and 19H of Depositories Act read with rule (3) of Depositories

(Procedure for Holding Inquiry and Imposing Penalties by Adjudicating

Officer) Rules, 2005 (hereinafter referred to as “Rules”) vide order

dated November 26, 2010 to inquire into and adjudge the alleged

of 38

violations of provisions of Brokers Regulations, DP Regulations and

certain SEBI Circulars committed by ARFSL.

SHOW CAUSE NOTICE, REPLY AND PERSONAL HEARING

4. Show Cause Notice No. EAD-7/PB/SS/1904/2011 dated January 17,

2011 (hereinafter referred to as “SCN”) was issued to the Noticee

under rule 4 of the Rules to show cause as to why an inquiry should

not be initiated and penalty be not imposed sections 15F and 15HB of

SEBI Act and section 19G of DP Act for the alleged violations of

provisions of Brokers Regulations, DP Regulations and certain SEBI

Circulars committed by ARFSL.

5. The aforesaid SCN was sent to address “Shubham Center, B-2, 5th

Floor, Cardinal Gracious Road, Chakala, Andheri (E), Mumbai – 400

099”. However, the SCN was returned undelivered with remark “Office

Shifted”. It was informed by Mr. Dipak Kedia, Compliance Officer of the

Noticee that office of the Noticee had shifted to 4th Floor, Silver

Metropolis, Opposite Bimbisar Nagar, Near Hub, Goregaon (E) –

400065. The SCN was resent to the aforesaid current address of the

Noticee vide letter dated February 04, 2011.

6. The Noticee vide letter dated February 22, 2011 submitted its reply to

the SCN. In its reply the Noticee denied the allegations.

7. In the interest of natural justice and in order to conduct an inquiry in

terms of rule 4(3) of the Rules, the Noticee was granted an opportunity

of personal hearing on April 11, 2011 vide notice dated April 05, 2011.

The Noticee vide letter dated April 08, 2011 sought adjournment of the

hearing to some other date after April 15, 2011. Acceding to the

request of the Noticee, last opportunity of hearing was granted to the

of 38

Noticee on April 20, 2011 vide letter dated April 13, 2011. Mr. Jugal

Mantri, Director and Mr. Deepak Kedia, Compliance Officer of the

Noticee (hereinafter referred to as “ARs”), appeared on April 20, 2011

and made the submissions. During the course of hearing the following

queries were raised to the Noticee:

“In your reply dated February 22, 2011, you have submitted that physical

contract notes were sent to all 4 clients and submitted the proof of delivery.

Upon perusal of the proof of delivery, the following is observed:

Nagarathna V (GBN5N007)

If you are claiming that you have sent contract note to Mr. Nagarathna V and

relied upon the Proof of delivery, please clarify the following:

• On the delivery receipt of the company only signature is given. The date of

receipt and name is blank.

• If you have sent the contract note within 24 hours of the transaction

executed on December 17, 2007, how is it possible that finance, security

and collateral ledgers for the period October 01, 2008 to December 31,

2008, DP statement for the month of December 2008, new nomination

form were sent to the Noticee. Moreover, in subject item on the receipt

submitted by you, there is no mention of contract note.

Shri. Tradco India Pvt. Ltd. (ICHLS018)

If you are claiming that you have sent contract note to Shri. Tradco India Pvt.

Ltd. and relied upon the Proof of delivery, please clarify the following:

• On the delivery receipt of the company the stamp of the client is not clear.

The date of receipt and name is blank.

• If you have sent the contract note within 24 hours of the transaction

executed on October 24, 2008 how is it possible is that finance, security

and collateral ledgers for the period October 01, 2008 to December 31,

2008, DP statement for the month of December 2008. Moreover, in subject

item on the receipt submitted by you, there is no mention of contract note.

of 38

Subhash Babel (JPRJS005)

• Proof of delivery is not enclosed as claimed by the Noticee.

Vandana Devi (JPV 334)

• Proof of delivery is not enclosed as claimed by the Noticee.

Third Party Receipts:

Q. Out of 371 clients, you have submitted that bank statements of 105 clients

were submitted to Inspection team and 56 bank statements submitted to

AO. Please submit the bank statements of remaining clients.

Account Opening procedure and KYC Norms:

Q. It is submitted by you that there are few instances where documents were

in transit and thus were post franked at Mumbai and there was no intention

whatsoever of evading any stamp duty. Please substatantiate the said

submission along with documentary evidence.

Dematerialisation Request:

Q. Upon perusal of the proof of dispatch submitted by you, it is claimed by

you that out 40 instances, in 13 instances documents were dispatched wihin 7

days. However, upon perusal of the annexure submitted by you, it is observed

that DRN numbers are not reflecting in the POD status report and only name

of the clients are reflecting. Moreover, upon comparison of Annexure sent to

Show Cause Notice and Annexure sent by you, it is observed that there is no

matching of dates. In the light of this, submit the proof of dispatch as well as

proof of delivery alongwith the name of clients and there DRN Numbers.”

8. The Noticee requested for time till May 02, 2011 to submit the written

submissions with regard to aforesaid queries. Acceding to the request

of the Noticee, time till May 02, 2011 was granted to the Noticee.

9. The Noticee vide letter dated May 02, 2011 submitted further written

submissions.

of 38

CONSIDERATION OF ISSUES AND FINDINGS

10. I have carefully perused the written and oral submissions of the

Noticee, copy of documents submitted by the Noticee and other

material available on record. The allegations against the Noticee, basis

therefor, reply of the Noticee and my findings thereon are as under :

11. NON DELIVERY OF CONTRACT NOTES TO THE CLIENTS IN

RESPECT OF BOUNCE ECNS

Allegation

Out of the total 85,493 clients registered with the Noticee at the time

of inspection in BSE Cash Segment, Electronic Contract Note

(hereinafter referred to as “ECN”) was sent to 31,603 clients who had

opted for ECN. On 4 days i.e. 17.12.07, 21.01.08, 17.03.08 and

24.10.08 from the blog of bounce mails on sample basis, 5 bounce

emails were picked up from each day’s log and the Noticee was

asked to give the proof of delivery (hereinafter referred to as “POD”)

for sending the physical contract note. It was informed by ARFSL that

ECN were sent to only 4 clients and to rest 16, certain other

information was sent through emails which bounced. The Noticee

was asked to segregate and give the PoD for given dates for all the

bounce emails through which the contract notes were sent. However,

the Noticee could not provide the same. It was alleged that by not

ensuring delivery of the contract notes to the clients in respect of

bounce ECNs, the Noticee has violated the provisions of SEBI

Circular No. MRD/DoP/SE/Cir-20/2005 dated September 08, 2005

and clauses A(2) & A(5) of the Code of conduct for Stock-brokers as

stipulated in Schedule II read with Regulation 7 of the Brokers

Regulations.

of 38

Reply

The Noticee vide its reply dated February 22, 2011 submitted that

physical contract notes were sent to all the 4 clients on the specified

trade date of which it has submitted the POD for 2 clients namely, i.e.

Vandana Devi (JPV334) and Subhash Babel (JPRJS005). POD of

contract notes of remaining two clients namely, i.e. Nagarthna V

(GBN5N007) and Shri. Tradco India Pvt. Ltd. (ICHLS018) are

submitted for ready reference. The Noticee further vide its reply

dated May 02, 2011 submitted the POD of contract notes for the

clients namely, Vandana Devi (JPV334) and Subhash Babel

(JPRJS005).

Finding

With regard to the clients namely, Vandana Devi (JPV334) and

Subhash Babel (JPRJS005), I have perused the copies of POD

submitted by the Noticee and find the submissions of the Noticee

satisfactory in this regard. However, with regard to the POD of the

contract notes of the clients namely, Nagarthna V (GBN5N007) and

Shri. Tradco India Pvt. Ltd. (ICHLS018), I find that the Noticee tried to

mislead the proceedings. In the reply dated February 22, 2011, the

Noticee submitted the copies of POD of contract notes of Nagarthna

V (GBN5N007) and Shri. Tradco India Pvt. Ltd. (ICHLS018). Upon

perusal of the same, I find the following:

Wherever the ECNs have not been delivered to the client or has

been rejected (bouncing of mails) by the e-mail ID of the client, the

member shall send a physical contract note to the client within 24

hours. Upon perusal of the delivery receipt of Nagarthana V

(GBN5N007) submitted by the Noticee, I find that on the said receipt

only signature is given and the date of receipt is blank. Further, the

Noticee has submitted the POD for the year 2008 giving the details of

of 38

transactions done in 2008. However, the alleged transactions are

executed on December 17, 2007. Thus, the Noticee has submitted

the POD which is almost one year later to the alleged transaction.

Similarly, in case of Shri. Tradco India Pvt. Ltd. (ICHLS018), I find

that the date of receipt is blank. Further, the alleged transaction took

place on October 24, 2008. However, the Noticee has submitted the

receipt of subsequent period including the details of collateral ledgers

for the period October 01, 2008 to December 31, 2008, DP statement

for the month of December 2008. However, there is no mention of

contract note for the said transaction on the receipt.

Further, during the course of hearing on April 29, 2011, the Noticee

admitted that, it does not have the POD of the contarct notes for the

aforesaid clients. Queries were raised regarding the aforesaid

observations to the Noticee during the course of personal hearing on

April 29, 2011 to which the Noticee replied that they would submit the

detailed submission in this regard. However, the reply dated May 02,

2011 subsequent to the hearing was silent on these observations.

Further, by making the submissions in the reply dated May 02, 2011

that “even though CN Pods are missing date and name of client,

still we have delivered additional contract note to client and

reconfirmation taken from both the clients” I find that the Noticee

contradicts its own submission made during the course of hearing

that they do not have POD of contact notes of two aforesaid clients

and were relying upon the copies of contarct notes submitted along

with its reply dated February 22, 2011. Moreover, the Noticee has

claimed to have delivered additional contact note to the aforesaid

clients and taken reconfirmation from both the clients. However, upon

perusal of the letter from Nagarathna V, I find that the said letter does

not bear any date and the copy of the contract note is not legible.

of 38

Further, the Noticee did not submit the letter from Shri. Tradco India

Pvt. Ltd. as claimed by it.

I find that the findings given in the inspection report were based on

sample test & checking of books of accounts and other records as

well as oral submissions of the member provided to inspection team.

Hence, the instances of irregularities/observations pointed out in

inspection report were illustrative in nature and were not all-inclusive.

In the present matter of contract notes, the inspection team has

checked the bounce mail log for only 4 days i.e. 17.12.07, 21.01.08,

17.03.08 and 24.10.08 and on sample basis, 5 bounce emails were

picked up from each day’s log.

Thus, out of 4 cases, the Noticee has not submitted proof of delivery

in 2 cases and moreover, mislead the adjudication proceedings.

The provisions of SEBI Circular No. MRD/DoP/SE/Cir-20/2005 dated

September 08, 2005 provides that wherever the ECNs have not been

delivered to the client or has been rejected (bouncing of mails) by the

e-mail ID of the client, the member shall send a physical contract

note to the client within the stipulated time under the extant

regulations of SEBI/stock exchanges and maintain the proof of

delivery of such physical contract notes.

In terms of Clauses A2 and A5 of the Code of Conduct prescribed

under the provisions of Brokers Regulations, the Broker shall

maintain high standards of integrity, promptitude and fairness and

shall act with due skill, care and diligence in the conduct of his

business. A stock-broker shall abide by all the provisions of the Act

and the rules, regulations issued by the Government, the Board and

the stock exchange from time to time as may be applicable to him.

of 38

Thus, in view of the aforesaid findings and submission of POD in 2

cases out of 4 cases, I am of the view that to this extent the Noticee

has violated the provisions of SEBI Circular No. MRD/DoP/SE/Cir-

20/2005 dated September 08, 2005 and clauses A(2) & A(5) of the

Code of conduct for Stock-brokers as stipulated in Schedule II read

with Regulation 7 of the Brokers Regulations.

12. THIRD PARTY RECEIPTS

Allegation

In case of 371 clients, the bank from which the funds were received

was different than the one entered in the client master. The Noticee

had not clarified the same during the period of inspection. However,

subsequently, copy of bank statements of 103 clients out of 371

clients were provided. It was observed that most of the statements

were pertaining to the year 2009. It was evident from the same that

these statements were obtained by the Noticee from the clients

pursuant to the observation of inspection team. It was alleged that by

not having adequate system in place to check receipt of third party

cheques, the Noticee has violated the provisions of SEBI Circular no.

SEBI/MRD/SE/Cir- 33/2003/27/08 dated August 27, 2003 and

clauses A(2) & A(5) of the Code of conduct for Stock-brokers as

stipulated in Schedule II read with Regulation 7 of Brokers

Regulations.

Reply

The Noticee has not accepted cash or given cash from/to the client

against its purchase or sale obligation. For the purpose of client

identification process, the Noticee takes a cancelled cheque and

bank details from the client. Further, it is always possible that the

client makes payment from his own alternative bank account to

of 38

manage his internal liquidity and pay in obligations. Even though

bank statements collected from the clients are for the year 2009 and

after inspection, still by providing said bank statements client had

supported Noticee for the act of acceptance of their cheques and

also proved that said cheques are issued by the respective clients

only for management of their own bank accounts. The Noticee further

stated that it has collected clients’ bank statement and thereby

confirmed that cheques which are received from clients are from their

bank accounts only.

Finding:

I have perused the documents submitted by the Noticee and find that

the Noticee tried to mislead the proceedings. The Noticee has

submitted the bank statements, pass book, cheques, etc. of 53

clients which were subsequent to the inspection period. However,

upon perusal of the same, I find that in the following cases, either the

bank account was opened in 2010 or the proof of bank statement

submitted by the Noticee etc, was contrary to the bank alleged in the

MIS. The details of such instances are as under:

• In respect of client namely, Dropadi Devi Gupta, bank as per

MIS was ICICI Banking Corporation Ltd. However, upon

perusal of the bank statement submitted by the Noticee, I

find that only the entries of transactions and name of the

client was given. However, the name of bank was not

provided in the bank statement.

• In respect of client namely, Jyotsna Gujarati, bank as per

MIS was Union Bank of India and bank as per Client master

was HDFC Bank. However, the Noticee has submitted the

cheque of HDFC Bank and not the proof of Union Bank of

India. In the present case the allegation was that funds were

of 38

received from different banks than the one entered in the

client master.

• In respect of client namely, Mridul Rupainwar, bank as per

MIS was State Bank of India and bank as per Client master

was Nainital Bank. However, the Noticee has submitted the

pass book of Indian Overseas Bank, Nainital Bank, Indian

Bank and Bank of India. However, the Noticee did not

produce any proof of State Bank of India.

• In respect of client namely, Pankaj Kumar Verma, , bank as

per MIS was Canara Bank and bank as per Client master

was Bank of India. However, the Noticee has submitted the

pass book of Central Bank. However, the Noticee did not

produce any proof of Canara Bank.

• In respect of client namely, Rajesh Mandot, bank as per MIS

was United Commercial Bank and bank as per Client master

was UCO Bank. However, the Noticee has submitted the

passbook of UCO Bank and not the proof of United

Commercial Bank.

• In respect of client namely, Savita Padmaraj Patil, bank as

per MIS was Corporation Bank and bank as per Client

master was Shrishantappanna Miraji Co-op. The Noticee

has submitted the pass book of Corporation Bank. Upon

perusal of the same, I find that date of account opening of

the said account was April 28, 2010 which was subsequent

to the inspection period.

• In respect of client namely, Ram Sunder Singh, bank as per

MIS was ICICI Banking Corporation Limited and bank as per

Client master was State Bank of India. However, the Noticee

has submitted the bank statement of Allahabad Bank and

not the proof of ICICI Banking Corporation Limited.

of 38

• In respect of client namely, Santosh Kumar Mishra, bank as

per MIS was United Co-op Bank Ltd. and bank as per Client

master was United Bank of India. However, the Noticee has

submitted the passbook of United Bank of India and not the

proof of United Co-op Bank Ltd.

I find that the findings given in the inspection report were based on

sample test & checking of books of accounts and other records as

well as oral submissions of the member provided to inspection team.

Hence, the instances of irregularities/observations pointed out in

inspection report were illustrative in nature and were not all-inclusive.

In the present matter of third party receipts, MIS for January 21, 2008

was only checked.

SEBI Circular no. SEBI/MRD/SE/Cir- 33/2003/27/08 dated August

27, 2003 provides that all payments shall be received / made by the

brokers from / to the clients strictly by account payee crossed

cheques / demand drafts or by way of direct credit into the bank

account through EFT, or any other mode allowed by RBI. The

brokers shall accept cheques drawn only by the clients and also

issue cheques in favour of the clients only, for their transactions.

In terms of Clauses A2 and A5 of the Code of Conduct prescribed

under the provisions of Brokers Regulations, the Broker shall

maintain high standards of integrity, promptitude and fairness and

shall act with due skill, care and diligence in the conduct of his

business. A stock-broker shall abide by all the provisions of the Act

and the rules, regulations issued by the Government, the Board and

the stock exchange from time to time as may be applicable to him.

of 38

In view of the aforesaid findings, I find that by not having adequate

system in place to check receipt of third party cheques, Noticee has

violated the provisions of SEBI Circular no. SEBI/MRD/SE/Cir-

33/2003/27/08 dated August 27, 2003 and clauses A(2) & A(5) of the

Code of conduct for Stock-brokers as stipulated in Schedule II read

with Regulation 7 of Brokers Regulations.

13. ACCOUNT OPENING PROCEDURE AND KYC NORMS

The inspection team scrutinized a sample size of 300 account

opening applications and verified along with the client agreements

and find the following discrepancies:

A1Allegation:

• In 14 instances accounts were opened before signing of

agreements between the Depository Participant and

Beneficial Owner.

A1 Reply:

• With regard to client ID 1181926, 1181867, 1189978,

1190183, 1176031,1182881,1172115,1176046 and 1175743

(total 9), the Noticee submitted that there was a manual error

in mentioning the date of entering into an agreement and

Noticee has rectified the error by taking signature of client on

the agreements. The Noticee has submitted the copies of

the agreements for perusal.

• With regard to client code 1181890, the Noticee has

submitted that it was a manual error in mentioning the date

of entering into an agreement. The Noticee has submitted

copies of the same for perusal.

of 38

• With regard to client code 1190086, 11900219 and 1190130

(total 3) the Noticee has submitted that they have obtained

new agreement from clients. The Noticee has submitted the

copies of the same for perusal.

• With regard to client code 1190120, the Noticee has

submitted that Beneficiary Owner ID of the said client does

not exist in its records.

A1 Finding:

• Upon perusal of the documents submitted by the Noticee

and material available on record, I do not find merit in the

submissions of the Noticee that it was a manual error in

mentioning the date of entering into an agreement and

Noticee has taken signature of clients on agreement for

rectification. In all the alleged instances the accounts were

opened by the Noticee on the same day. There is not a

single case where the accounts were opened on a different

date. Out of 14 alleged instances, in twelve instances the

witness mentioned in the agreement was the same entity, in

one case the witness page is blank and in another case the

Noticee stated that the BO ID of the client did not exist. With

regard to client ID 1181890, the Noticee did not produce the

documentary evidence in support of its contention that

account has been closed by the Noticee. With regard to

client ID 1176031, the alleged date of account opening is

January 18, 2008 and date of agreement is January 30,

2008. However, the Noticee has submitted the agreement

dated January 10, 2008. Further, with regard to client ID

1175743, the alleged date of account opening is January 18,

2008 and date of agreement is January 21, 2008. However,

of 38

the Noticee has submitted the agreement dated January 12,

2008. With regard to client ID 1176046, the Noticee has

submitted the same alleged agreement dated January 25,

2008 as against its claim that the same had been rectified.

Further with regard to client IDs 1190086, 1190219 and

1190130, the Noticee has submitted new agreements.

A2Allegation:

• In 3 cases franking was done after account opening.

• In 5 cases agreements were signed before franking was

done.

• In 1 case, agreement was not franked

• In 3 cases agreement was without any date.

• In 1 case DP had not signed the agreement.

A2 Reply:

• With regard to 3 cases of franking done after account

opening, the Noticee has submitted new agreements of the

said clients having prior date of account opening.

• With regard to 5 cases where agreements were signed

before franking being done, the date was wrongly mentioned

by client and the Noticee failed to observe the same due to

oversight. However, the same has been rectified and the

copies of the same are submitted for perusal.

• With regard to 1 case where agreement was not franked, the

Noticee has submitted that it had taken new agreement

signed by client and submitted a copy of the same for

perusal.

of 38

• With regard to 3 cases where the date of entering into the

agreement was not mentioned, the Noticee has submitted

that the same has been rectified and enclosed the copies of

agreements for perusal.

• With regard to 1 case where DP had not signed the

agreement, the Noticee has submitted that the same has

been rectified and enclosed the copy of agreement for

perusal.

A2 Finding:

• In respect of 3 cases of franking done after account opening,

I am of the view that submitting the backdated new

agreements is contrary to the law and not acceptable.

Moreover, all the three agreements were witnesses by the

same person though the beneficial owners are having

different addresses.

• In respect of 5 cases where agreements were signed before

franking being done, I find that in two cases and three cases

respectively, agreements were witnesses by the same

person. Moreover, the Noticee has admitted its mistake.

• In respect of 1 case where agreement was not franked, I am

of the view that submitting the backdated new agreement is

contrary to the law and not acceptable.

• In respect of 3 cases where the date of entering into the

agreements were not mentioned, I find that agreements are

witnesses by the same person and all the accounts were

of 38

opened on January 18, 2008. Moreover, the Noticee has

admitted its mistake.

• In respect of 1 case where DP had not signed the

agreement, the Noticee has admitted its mistake.

A3 Allegation

• Proof of address not there, electricity bill more than two

months old in respect of 2 clients.

• Witness signature not there in the agreements in respect of

83 clients.

• Client’s signature taken on blank “transfer of funds” form in

respect of 9 clients.

• In person verification not done in respect of 1 client.

• Client though being an individual, account opening form for

corporate has also been signed in respect of 1 client.

• PAN card not attached with the form in respect of 1 client.

A3 Reply

• With regard to proof of address of 2 clients the Noticee has

submitted that, dates mentioned in the electricity bill was

falling under the prescribed limit and therefore, it has

accepted the same.

• With regard to witness signature not there in the agreements

in respect of 83 clients, the Noticee submitted that they have

taken the signature of the witnesses and the same error

does not occur and submitted the copies of the same.

Further, it was submitted by the Noticee that BO ID

15012008 and 1180408 do not exist in its records.

of 38

• With regard to client’s signature taken on blank “transfer of

funds” form in respect of 9 clients, the Noticee has submitted

that transfer of fund form was its own internal requirement

form and it does not fall under the purview of Depositories.

The transfer of fund was meant for adjustment of dues from

trading to DP or vice versa. It was a facility given to clients

for the smooth flow of operations. However, the said form is

now abolished. The Noticee further submitted that BO ID

15012008 does not exist in its records.

• With regard to In person verification not done in respect of 1

client, the Noticee has submitted that in person verification

was done. However, by mistake the stamp of in person

verification was not affixed at the time of account opening.

However, once again in person verification has been

conducted and has affixed the stamp of in person verified.

Copy of the same has been submitted for perusal.

• With regard to client though being an individual, account

opening form for corporate also being signed in respect of 1

client, the Noticee has submitted that it has not obtained

account opening form of corporate but an annexure of

Financial Status information of client as per PMLA was

obtained. However, the said annexure was erroneously

named as corporate and rest of the things are of individual

client only. The copy of the form has been submitted for

perusal.

• With regard to PAN card not being attached with the form in

respect of 1 client, the Noticee submitted that PAN card was

of 38

present in the form and enclosed the copy of the same for

perusal.

A3 Finding

• SEBI vide circular No. MRD/DoP/Dep/Cir-29/2004 dated

August 24, 2004 for the convenience of the beneficial

owners, broadened the list of documents that may be

accepted as POI and/or POA for the purpose of opening a

BO Account including copy of electricity bill and residence

telephone bill not more than two months as proof of address.

In respect of client 1181945 the Noticee submitted that the

date of electricity bill was October 25, 2007, due date was

November 20, 2007 and account opening date was January

18, 2008. However, upon perusal of the account opening

form of the said client on record, I find that the date of

account opening form is blank as against the claim of the

Noticee that it was opened on January 18, 2008 and in

respect of client 1174205, the Noticee submitted that the

date of the residence telephone bill was November 14, 2007,

due date was December 05, 2007 and account opening date

was January 18, 2008. However, upon perusal of the

account opening form of the said client on record, I find that

the date of account opening form is January 09, 2008 and

the date of agreement signed between the Noticee and the

client is January 10, 2008 as against the claim of the Noticee

that it was opened on January 18, 2008. With respect to

client code 1174205, I find that bill date and account opening

date are falling under the prescribed period. However, in

both the aforesaid cases the Noticee tried to mislead the

proceedings by giving the wrong impression of dates.

of 38

• In respect of 83 clients where witness signatures were not

found in the agreements during inspection, I find that the

Noticee has admitted its mistake and taken the signatures of

the witnesses on the agreements.

• In respect of 9 clients where client’s signature taken on blank

“transfer of funds” form, upon perusal of blank transfer of

fund form, I find that the date is blank, the columns of demat

a/c no. and trading a/c no. are blank. I am of the view that

the Noticee should not have taken the signature of the

clients on the blank transfer of fund forms. However, by

doing so, the Noticee should have put the a/c nos. of the

clients, details of which were available. However, the

Noticee did not do so. There could have been possibility of

misuse of the said form.

• In respect of 1 clients’ In-person verification not being done, I

have perused the document submitted by the Noticee and

find that the Noticee has put the stamp of verification on

election commission of India identity card and PAN card of

client. In the said stamps date of verification is not

mentioned by the Noticee.

• In respect of 1 client who being an individual had also

signed, account opening form for corporates, I find that as

per PMLA requirement, CDSL advised DPs vide its

communiqué 989 dated November 13, 2007, that the

information on “Financial Status” and ‘Nature of Business” of

clients in the Account opening form (AOF) should be

obtained. It was advised to the DPs that they will be allowed

to use the old AOFs and DIS until March 31, 2008 or till such

of 38

time the old AOFs and DIS stocks last, whichever is earlier.

In the interim, DPs were advised to ensure that the

additional information sought from account holders, for

opening of new accounts, is taken on record on a separate

sheet, duly signed by the account holder(s). In the present

case, the Noticee tried to mislead the proceedings by stating

that they have obtained an annexure of financial status

information of client as per PMLA and enclosed the form for

perusal. However, upon comparison of the form submitted

by the Noticee and copy of the form along with the

documents perused by the inspection team, I find that in the

form submitted by the Noticee, there is no annexure to the

said form regarding financial status of the client. Moreover,

there is no mention of financial status of client in the form. I

have perused the form along with the documents on records

and find that the contents of the form are of corporate form

as against the one submitted by the Noticee later on that the

said annexure was erroneously named as corporate (which

the Noticee has not produced before me) and rest of the

things are of the individual client. Thus, I do not find merit in

the submissions of the Noticee.

• With regard to PAN card not attached with the form in

respect of 1 client, upon perusal of the form on record and

form submitted by the Noticee, I find that PAN card was

attached with the form of the said client. Thus, I find merit in

the submissions of the Noticee in this regard.

• In view of the above, the very fact that out of 121 account

opening forms along with the agreements, 81 accounts

were opened on January 18, 2008 cannot be taken lightly

of 38

and it needs serious consideration. I am of the view that the

Noticee should have been more diligent while following

account opening procedure.

• I find that the findings given in the inspection report were

based on sample test & checking of books of accounts and

other records as well as oral submissions of the member

provided to inspection team. Hence, the instances of

irregularities/observations pointed out in inspection report

were illustrative in nature and were not all-inclusive. In the

present matter of account opening procedure and KYC

norms, the inspection team has scrutinized only 300

accounts opening application along with the client

agreements and found discrepancies in 121 account

opening applications along with the agreements.

Regulation 41 of DP Regulations provides that every

participant shall enter into an agreement with a beneficial

owner before acting as a participant on his behalf, in a

manner specified by the depository in its bye-laws.

SEBI circular MRD/DOP/DEP/Cir-29/2004 dated August 24,

2004 requires documents that may be accepted as Proof of

Identity (POI) and Proof of Address (POA) while opening a

Beneficiary Owner Account.

• In view of the above, by not following account opening

process properly and discrepancies being found in KYC

account opening form along with agreements, I find that the

Noticee has violated regulation 41 of DP Regulations and

SEBI circular MRD/DOP/DEP/Cir-29/2004 dated August 24,

2004.

of 38

14. DELIVERY INSTRUCTION SLIPS (DIS)

The inspection team scrutinized a sample size of 800 DIS and

found the following discrepancies:

Allegation:

• In 14 instances date/time stamp were not there on the DIS.

• Instructions are processed without signature of the maker

and the checker suggesting that no maker-checker was

employed in 82 instances.

• Beneficial owners name not written on the DIS in 48

instances

• POA’s signature not available in back-office in one instance.

• DIS has signature of two holders whereas, the back office

has details of only one holder in one instance

• Mismatch in signatures on DIS and the one available on

back office in one instance.

• Date not entered in DIS in six instances.

Reply:

• With regard to 14 instances wherein date/time stamp were

not there on the DIS, the Noticee has submitted that in few

cases, the received stamp was affixed on DP copy.

However, the request was executed on the date mentioned

by the Beneficial Owner on the slip itself thus not causing

any financial loss to Beneficial Owner. The significance of

received stamp is to ensure compliance time for execution of

slip which can also be identified from the date mentioned by

the Beneficial Owner on the slip.

of 38

• With regard to 82 instances wherein instructions are

processed without signature of the maker and the checker

suggesting that no maker-checker was employed, the

Noticee has submitted that the instruction slips were

punched in back office software in branch as Maker whereas

HO authorizes and executes the slip as Checker. The

concept of Maker/Checker is already inbuilt in the system

and cannot be bypassed. In its case the maker is its branch

and the checker is at HO.

• With regard to 48 instances wherein Beneficial owners name

was found to be not written on the DIS, the Noticee has

submitted that it has mandatory system of having pre

stamped Beneficial owner’s ID’s on the slip.

• With regard to one instance wherein POA’s signature was

not available, the Noticee has submitted that the POA’s

signature was present in the back office and live system.

However, due to technical snag in the system, the same

could not be shown and submitted to the SEBI inspection

team. The Noticee has submitted the copy of the same.

• With regard to one instance wherein DIS has signature of

two holders and the back office has details of only one

holder, the Noticee has submitted that the signature in DIS

was not of two holders but of only one. The holder has

signed twice in both columns at his discretion. The Noticee

has submitted the copy of the same.

• With regard to one instance wherein mismatch in signatures

on DIS and the one available on back office was observed

of 38

by the inspection team, the Noticee submitted that the

signature made was not that much differing and in addition

to that Noticee has also taken independent confirmation from

clients in case of off-market transfer by calling clients on

their contact no. The same was also followed in the

highlighted case and based on confirmation received it has

executed the slip. Till date, it had not received any complaint

for the said delivery instruction slip and the said case has not

been highlighted in CDSL Audit as well. The Noticee has

submitted the copy of the same.

• With regard to six instances where date was not entered in

DIS, the Noticee has submitted that the missing date on DIS

was the date of client filing the instruction not the execution

date. The instructions needs to be executed as per the

execution date mentioned on the slips. The Noticee further

submitted that it is processing and executing the DIS as per

the execution date mentioned on the slip which is required

by the rules.

Finding:

• In order to verify the submission made by the Noticee that

the request was executed on the date mentioned by the BO

on the slip itself, an e-mail dated November 02, 2011 was

sent to CDSL advising it to provide the details of said 14

alleged transactions including transaction date. CDSL vide

e-mail dated November 12, 2011 submitted the required

information. Upon perusal of the information submitted by

CDSL, I find that in 10 instances the date of execution is

same as claimed by the Noticee. However, in 4 instances

of 38

the date of execution is different than that claimed by the

Noticee.

• In respect of 82 instances, wherein instructions were

processed without signature of the maker and the checker, I

am of the view that the purpose of maker and checker

system is to ensure the accuracy of data and it is a

mechanism to check unauthorized transaction. I find that the

Noticee has given a general explanation of the allegation.

The Noticee did not produce any documentary evidence to

support its contention that the concept of Maker/Checker is

already inbuilt in the system and cannot be bypassed in

respect of alleged 82 instances.

• In respect of 48 instances wherein BOs name was found not

written on the DIS, the Noticee has admitted its mistake.

• In respect of 3 instances respectively wherein POA’s

signature not available in back office, DIS has signatures of

two holders whereas the back office has details of only one

holder and mismatch in signatures on DIS and the one

available on back office, I am of the view that these are only

single instances and benefit of doubt can be given to the

Noticee.

• In respect of 6 instances wherein date was not entered in

DIS, I do not find merit in the submissions of the Noticee as

the Noticee did not produce any documentary evidence

including transaction statement in support of its contention

that the instructions were executed as per execution date

mentioned in DIS.

• I find that the findings given in the inspection report were

based on sample test & checking of books of accounts and

other records as well as oral submissions of the member

of 38

provided to inspection team. Hence, the instances of

irregularities/observations pointed out in inspection report

were illustrative in nature and were not all-inclusive. In the

present matter of DIS, the inspection team has scrutinized

800 DIS on sample basis and found discrepancies in 153

DIS which are discussed in detailed in the aforesaid

paragraphs.

• Clause 4 of Regulation 20A of DP Regulations provides that

a Depository Participant shall be prompt and diligent in

opening of a beneficial owner account, dispatch of the

Dematerialisation Request Form, Rematerialisation Request

Form and execution of Debit Instruction Slip and in all the

other activities undertaken by him on behalf of the beneficial

owners.

• Thus, in view of the aforesaid discrepancies in processing of

DIS, I am of the view that Noticee has not exercised proper

care and due diligence and consequently violated

stipulations mentioned in Clause 4 of Regulation 20A of DP

Regulations.

15. DEMATERIALISATION REQUEST

Allegation:

• With regard to 3908 instances there was delay beyond the

stipulated time in dispatching. Samples of 40 such instances

were forwarded to the Noticee as Annexure.

• During scrutiny of the rejected DRNs, it was observed that

out of total 5202 instances, in 867 instances, demat requests

were rejected due to mistake of Noticee. The reason-wise

of 38

break up of such rejections was forwarded to the Noticee as

Annexure.

• Thus, by delaying dispatch of physical documents to

Issuer/RTA beyond 7 days and for rejection of demat

requests in some cases due to the mistake of the Noticee

resulted in violation of regulation 54(4) of the DP Regulations

and Central Depository Services (India) Limited Operating

Instruction 4.4.15.

Reply:

• With regard to delay in DRF, the Noticee has submitted that

in 13 instances, DRF request was dispatched within seven

days and submitted the proof of dispatch for the same. In 22

instances, all the DRF requests pertaining to one family

where the client has submitted share certificates in bulk for

dematerialization. However, the clients had made an error in

filing the DRF, so the same was kept on hold for a necessary

rectification, thus there was delay in process of requests. In

5 instances, the Noticee has admitted the delay.

• With regard to rejection of DRF due to mistake at Noticee’s

end, the Noticee has submitted that out of listed cases of

rejections, certain rejections arose because of improper

services from RTA’s end such as non updation of records in

DP, incomplete information etc. which were beyond control

of DP.

of 38

Finding:

• Delay in DRF:

In respect of 13 instances, the Noticee in its reply dated

February 22, 2011 claimed that out of 40 instances, in 13

instances documents were dispatched within 7 days.

However, upon perusal of the annexure submitted by the

Noticee, it is observed that DRN numbers were not reflecting

in the POD status report and only name of the clients were

reflecting. Moreover, upon comparison of Annexure sent with

SCN and Annexure sent by the Noticee with its reply to the

SCN, it is observed that there was no matching of dates. In

the light of this, during the course of hearing Noticee was

advised to submit the proof of dispatch as well as proof of

delivery alongwith the names of clients and their DRN

Numbers. Upon perusal of the reply of the Noticee dated

May 02, 2011 to the said queries, I find that the Noticee has

submitted the copies of proof of dispatch but the DRN nos.

have been written by hand in ink. Thus, in the light of

inconsistent submissions made by the Noticee, it would be

appropriate to refer to the observations of The Hon’ble High

Court of Calcutta in Writ Petition 331/2001 in the matter of

Arun Kumar Bajoria v/s SEBI – Order dated March 27, 2001.

The Hon’ble Court while examining the issue of compliance

with regard to regulation 7 of SEBI (Substantial Acquisition

of Shares and Takeovers) Regulations, 1997, made the

following observations:-

“…… Therefore, it is obligatory on the part of the person so

acquiring to inform the company. In what mode or manner such

information should be given has not been prescribed. It has not

also been mentioned that the subject information or disclosure

must be given in writing. Such disclosure, therefore, may be made

of 38

orally or through telephone or in writing transmitted in some

known manner. The information or disclosure must, however,

reach the company. In law, anyone sending a written information

through the agency of someone else, appoints such agency as his

agent. If a letter is posted, unless the law specifies, the Postal

Authority acts as an agent of the sender. As appears to me, by law,

in respect of two instances the post office is considered as the

agent of the receiver of the letter. The first is in relation to

acceptance of an offer and the second is in respect of a letter sent

by registered post. In all other circumstances, the post office acts

as a mere agent of the sender of the letter. The Certificate of

Posting may be an evidence of engaging the Postal Authority as an

agent of the sender to deliver the subject letter, but not the proof of

receipt of the letter by the addressee. In the event, it is contended

by the addressee that the letter has not been received by him, it

must be established and if necessary through the agent that the

letter has been received by the addressee. Merely because the

letter was sent by post, it cannot be contended that the sender has

discharged his obligations under Regulation 7 of the said

Regulations as the said regulation cast the duty and obligation

upon the acquirer to ensure receipt of the disclosure or

information by the company concerned and argument contrary

thereto is not acceptable. It is not permissible for the sender to

contend that he has no control over the mode of transmission

inasmuch as he has free choice of selecting the mode of

transmission and for that purpose to engage a suitable agent.”

If the facts of the present case are tested with the aforesaid

observations of the Hon’ble High Court, it would follow that it

is the responsibility of the sender to establish and if

necessary, through the agent, that the letter has been

received by the addressee. In other words, in the instant

case, the Noticee ought to have ensured that the

communication reportedly sent by it had reached to the

Issur/RTA. The Noticee has only provided the proof of

dispatch and not the proof of delivery. Thus, the burden of

proving the delivery of the communication is squarely upon

of 38

the Noticee. The Noticee could not produce any proof in

support of delivery of the said communications to the

Issur/RTA. Therefore, I do not find merit in the submissions

of the Noticee in this regard.

• In respect of 22 instances, I have perused the transaction

statements submitted by the Noticee and find that these

instances belonged to one single family. However, the

Noticee has failed to explain the nature of error made by the

clients in filing the DRF.

• In respect of 5 instances, the Noticee has admitted the

delay.

• In respect of 867 instances wherein the demat requests

were rejected due to the mistake of the Noticee, I find the

explanation of the Noticee general in nature and the Noticee

failed to produce proper reply to the specific instances cited.

I am of the view that the reasons mentioned by the Noticee,

did not, in any way, absolve the Noticee of its failure in

complying with the statutory requirements. Thus, I do not

find merit in the submissions of the Noticee.

• I find that during the period, April 2007 to June 2009, a total

of 43757 no. of DRNs were generated and out of which 5202

were rejected as per data submitted by the Noticee to the

inspection team. It was observed that in 3908 instances

there was delay beyond the stipulated time in dispatching.

Samples of such instances totaling 40 were forwarded to the

Noticee. During scrutiny of the rejected DRNs, it was

observed that out of total 5202 instances, in 867 instances,

of 38

demat requests were rejected due to the mistake on the part

of the Noticee as discussed in detail in the aforesaid

paragraphs.

Delay in sending DRFs to RTA/issuer As per Regulation 54(4) of the DP Regulations, “the participant

shall, within 7 days of the receipt of certificate of security refer to

in sub-regulation (1) furnish to the issuer details specified in

regulation 2 along with the certificate of security”

As per CDSL Operating Instruction 4.4.15, the DP must

dispatch the physical documents to the Issuer/RTA within 7 days

from the date of receiving physical documents from the BO.

• In view of the above, I am of the view that by delaying

dispatch of physical documents to Issuer/RTA beyond 7

days and rejection of demat requests due to Noticee’s

mistake resulted in violation of regulation 54(4) of the DP

Regulations and Central Depository Services (India) Limited

Operating Instruction 4.4.15.

16. From the above stated facts it is clear that the conduct of the Noticee

during the adjudication proceedings was far from satisfactory and it is

evident from the documents and material available on record that the

Noticee used all possible excuses and tried every bit to divert the

attention and mislead the proceedings. For example, the callous

attitude of the Noticee witnessed from the fact that the Noticee

submitted the backdated agreements. Further, the Noticee has given

the impression of wrong dates and submission of the bank statements

and cheques wherein either the bank account was opened in 2010 or

the proof of bank statement submitted by the Noticee etc, was contrary

to the bank alleged in the MIS. I am of the view that the Noticee was

bound by the code of conduct under which it was registered as a stock

of 38

broker to act in prompt, ethical and professional manner and exercise

at all times due skill, care and diligence in the conduct of its business

dealings. However, from the aforesaid facts it is evident that it has

failed in exercising due skill, care and diligence in conduct of its

business.

17. On judicious exercise of the discretion conferred upon me, bearing in

mind the facts and circumstances of this case, I hold that the allegation

of the violation of the aforesaid provisions of Brokers Regulations, DP

Regulations and certain SEBI Circulars by the Noticee stands

established.

18. The Hon’ble Supreme Court of India in the matter of SEBI Vs. Shri

Ram Mutual Fund [2006] 68 SCL 216(SC) held that “In our considered

opinion, penalty is attracted as soon as the contravention of the statutory

obligation as contemplated by the Act and the Regulations is established and

hence the intention of the parties committing such violation becomes wholly

irrelevant…”.

19. Thus, the aforesaid violation by the Noticee makes it liable for penalty

under section 15F(a) of SEBI Act (for para no.11), section 15 HB of

SEBI Act (for para no. 12) and section 19G of DP Act (for para no. 13

to 15) (which reads as follows:

15F. Penalty for failure in case of stock brokers.- If any person,

who is registered as a stock broker under this Act, -

(a) fails to issue contract notes in the form and in the manner

specified by the stock exchange of which such broker is a member,

he shall be liable to a penalty not exceeding five times the amount

for which the contract note was required to be issued by that

broker;

Penalty for contravention where no separate penalty has been

provided

of 38

15HB. Whoever fails to comply with any provision of this Act, the

rules or the regulations made or directions issued by the Board

thereunder for which no separate penalty has been provided, shall

be liable to a penalty which may extend to one crore rupees.

Penalty for contravention where no separate penalty has been

provided 19G.Whoever fails to comply with any provision of this Act, the

rules or the regulations or bye-laws made or directions issued by

the Board thereunder for which no separate penalty has been

provided, shall be liable to a penalty which may extend to one

crore rupees.

20. While determining the quantum of penalty under section 15F(a), 15HB

of SEBI Act and 19G of DP Act , it is important to consider the factors

stipulated in section 15J of SEBI Act and 19I of DP Act, which reads as

under:-

“15J Factors to be taken into account by the adjudicating officer

While adjudging quantum of penalty under section 15-I, the

adjudicating officer shall have due regard to the following factors,

namely:-

(a) the amount of disproportionate gain or unfair advantage,

wherever quantifiable, made as a result of the default;

(b) the amount of loss caused to an investor or group of

investors as a result of the default;

(c) the repetitive nature of the default.”

"19 -I. Factors to be taken into account by the adjudicating officer

While adjudging quantum of penalty under section 19H, the adjudicating

officer shall have due regard to the following factor s, namely:-

(a) the amount of disproportionate gain or unfair advantage,

wherever quantifiable, made as a result of the default;

(b) the amount of loss caused to an investor or group of investors as

a result of the default;

(c) the repetitive nature of the default. "

21. As mentioned earlier, since aforesaid charges alleged against the

Noticee are established, it would be liable for a penalty as provided

under the provisions of law quoted above. The Noticee has however

tried to impress upon me the fact of considering the concept of

of 38

materiality viz. commensurate with the volume of documents

generated on a daily basis and treating highlighted cases as

exceptions. The Noticee has also stated that these mistakes have

been corrected at the earliest possible time. As discussed earlier, I am

not inclined to give the benefit of doubt to the Noticee on this issue in

view of the misleading attitude of the Noticee. In any case, to dismiss

their aberrations as mere exceptions would amount to dismissing as a

nullity, all statutory obligations required to be adhered to under the

relevant regulations and which are issued keeping in mind the interests

of the common man/investors. Moreover, I find that the findings given

in the inspection report were based on sample test & checking of

books of accounts and other records as well as oral submissions of the

member provided to inspection team. Hence, the instances of

irregularities/observations pointed out in inspection report were

illustrative in nature and were not all-inclusive as discussed in the

preceding paragraphs.

22. However before fixing the quantum of penalty that is commensurate

with all the charges leveled and established against the Noticee, it

would be necessary to also refer to certain factors as enumerated

under Section 15J of SEBI Act and 19I of DP Act, that need to be

taken into account while adjudging the quantum of penalty. These

factors include the amount of disproportionate gain or unfair advantage

made as a result of the said default, the amount of loss caused to the

investors and the repetitive nature of default. Thus it is clear that the

adjudicating officer is required to have due regard to the factors stated

in the section. The same is a direction and not an option, which is

however to be exercised with due regard to his discretion to be

exercised judiciously, depending upon the facts and circumstances of

each case as well as after analysing all the relevant material available

on record especially in the case of failure to perform statutory

of 38

obligations. Although from the facts on record, it is not clear as to

whether the Noticee would have enjoyed any gain or unfair advantage

as a result of their defaults, it cannot be denied that any evasion of the

regulatory provisions issued by the regulator in the interests of the

investors or non adherence to the same for any reasons whatsoever is

bound to affect the interests of such investors and deprive the general

public and the investor class as a whole, of a fair and regulated

market. Although such a loss cannot be specifically computed in

monetary terms, the fact remains that all regulatory provisions have a

specific purpose behind their enactment. The very purpose of enacting

any legislation is due adherence to the procedures laid down there

under to ensure the sound and smooth functioning of the capital

market. If no cognizance were to be taken of any breach of these

provisions and no liability fixed there upon, the entire purpose of

incorporating the provisions in the said enactments would become

redundant.

ORDER

23. After taking into consideration all the facts and circumstances of the

case, I hereby impose a monetary penalty of `5,00,000 /- (Rupees

five lakh only) on the Noticee which will be commensurate with the

violations committed by it.

24. The Noticee shall pay the said amount of penalty by way of demand

draft in favour of “SEBI - Penalties Remittable to Government of India”,

payable at Mumbai, within 45 days of receipt of this order. The said

demand draft should be forwarded to Mr. B.N. Sahoo, Deputy General

Manager, MIRSD-1, SEBI, SEBI Bhavan, Plot No. C – 4 A, “G” Block,

Bandra Kurla Complex, Bandra (E), Mumbai – 400 051.

of 38

25. In terms of rule 6 of the Rules, copies of this order are sent to the

Noticee and also to the Securities and Exchange Board of India.

Date: November 30, 2011 PARAG BASU lace: MUMBAI ADJUDICATING OFFICER

adjudication order in respect of anand rathi financial services ltd. · 2018. 8. 16. · m/s anand...

Documents