Certificate of registration of stockbrokers canceled to prevent the misuse of membership – THE SECURITIES AND EXCHANGE BOARD OF INDIA
Certificate of registration of stockbrokers canceled to prevent the misuse of membership – THE SECURITIES AND EXCHANGE BOARD OF INDIA The stockbrokers registered under stock exchanges have been expelled from their membership by stock exchanges in terms of Section 12(1) of the Securities and Exchange Board of India Act, 1992 and Brokers regulation,1992, and certain conditions were granted to the stockbrokers including the condition that they continue to be a member of a recognized stock exchange. The current proceedings are conducted In the matter as the noticee qualifies for the grant of certificates. The proceedings are conducted by the appointed adjudication officer ANANTA BARUA WHOLE TIME MEMBER The noticee is no longer holding the certificates as the Certificate of Registrations as a stock broker have been granted to the Notices subject to the conditions of registration provided under Regulation 9 of the Broker Regulations, 1992. In this regard, the  Regulations 9(a) of the Broker Regulations, 1992, one of the conditions of registration is that the stockbroker holds the membership of any recognized stock exchange and as the noticee are no longer holding the certificate it can be said that the noticee no longer fulfills the condition under Regulation 9(a) of the Broker Regulations, 1992 by which Certificate of Registration was granted to the Notices. The current proceedings were initiated under Section 12(3) SEBI Act, 1992 read with Regulation 30A of the SEBI Regulations, 2008, and a show-cause notice was sent to notices as to why the certificate of registration granted under the Act or the regulations made thereunder, should not be canceled under Section 12(3) of the SEBI Act, 1992 read with Regulation 30A of the Intermediaries Regulations, 2008 and no reply was received from the notices. From the provisions of law and from the available facts it was considered that the Certificate of Registrations have been granted by SEBI to the Notices subject to, the conditions of registration under Regulation 9 of the Broker Regulations, 1992, and the stock exchanges have informed SEBI that the Notices were expelled from their membership by them and the same has been communicated to the Noticees. the Noticees have ceased to satisfy the conditions of registration stipulated under Regulation 9 (a) of Broker Regulations, 1992 and the procedure of cancellation of registration has been followed properly and therefore the member considers that the certificate of registration as a stock broker, granted to the Noticees under the SEBI Act, 1992 and the Broker Regulations, 1992, should be canceled under Section 12(3) of the SEBI Act, 1992 read with Regulation 30A of the Intermediaries Regulations, 2008. The following directions were also issued by exercising the powers conferred under Section 12(3) of the SEBI Act, 1992 read with Section 19 of the SEBI Act, 1992 and Regulation 30A of the Intermediaries Regulations, 2008, and registration of all 4 noticees was canceled. The main purpose for canceling the registrations was to prevent the misuse of their certificate of registration with SEBI, without being a member of a recognized stock exchange, on unaware investors and noticee will be held liable for the conduct of any such act. Hence the order was passed and will be enforced with immediate effect.
Order against certain Stock Brokers WTM AB MIRSD DoR 22 2021 22 SECURITIES AND EXCHANGE BOARD OF INDIA ORDER UNDER SECTION 12(3) OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT 1992 READ WITH REGULATION 30A OF SEBI INTERMEDIARIES) REGULATIONS 2008 Name of Noticees 1. Conard 2. 3. KSBL Securities LimitedAAACK0784G 4. Credential 1. Conard Securities Private Limited Anee Securities Private Limited KSBL Securities Limited and Credential Stock Brokers Limited(hereinafter referred to as “Noticees”) are Stock Brokers registered with Securities and Exchange Board of Indiain terms of Section 12(1) of the Securities and Exchange Board of India Act 1992and SEBI Regulations 1992 hereinafter referred to as “Broker Regulations 1992”). The registration to the Noticees as a stock broker was granted subject to certain conditions including the condition that they continue to be member of a recognised stock exchange. At the time of grant of registration as stock broker the Noticees were trading members of the recognised Stock Exchanges the details of which are given hereunder: Order against certain Stock Brokers Name of the Stock Broker Stock Exchange Conard Securities Private Limited Anee Securities Private Limited KSBL Securities Credential Stock Brokers Limited BSE NSE MSEI NCDEX MCX BSE NSE MSEI PAN Number INZ000218639 AAHCC3679D INZ000209430 AAMCA2521M INZ000104638 AAACK0784G INB230903331 AABCC1868L NSE National Stock Exchange of India Limited BSE BSE Limited MSEI Metropolitan Stock Exchange of India Limited NCDEX National Commodity and Derivatives Exchange Limited MCX Multi Commodity Exchange of India Limited 2. These recognised stock exchanges where the Noticees were holding membership have informed SEBI that the Noticees have been expelled from their membership by them and the same has been communicated to the Noticees. The details of communication regarding their expulsion from membership of recognised stock exchange sent by the recognised stock exchanges to the Noticees are as under: Name of Stock Broker Stock Broker Date of Expulsion of Stock Broker Communication to the Conard Securities Private Limited Credential Stock Brokers Limited KSBL Securities Anee Securities Private Limited March 26 04 2019 28 2020 15 2020 March 03 19 2020 March 02 16 2020 03 2020 08 2020 3. In view of the above I note that the Noticees are no longer holding membership of any stock exchange. I note the Certificate of Registrations as stock broker have been granted to the Noticees subject to the conditions of registration provided under Regulation 9 of the Broker Regulations 1992. In this regard I note that under Regulations 9(a) of the Broker Regulations 1992 one of the conditions of registration is that the stock broker holds the membership of any recognized stock exchange. Since the Noticees are no longer holding membership of any recognized stock Order against certain Stock Brokers exchange they no longer fulfil the conditions stipulated under Regulation 9(a) of the Broker Regulations 1992 by which Certificate of Registration was granted to the Noticees. 4. In view of the aforesaid SEBI initiated proceedings under Section 12(3) SEBI Act 1992 read with Regulation 30A of the SEBIRegulations 2008 and vide SCNs dated September 03 2021 called upon the Noticees to show cause as to why the certificate of registration granted under the Act or the regulations made thereunder should not be cancelled under Section 12(3) of the SEBI Act 1992 read with Regulation 30A of the Intermediaries Regulations 2008. SCNs also advised the Notices to file their reply to SCN along with documentary evidence if any within 21 days from the date of receipt of the SCN and failing which it would be presumed that the Noticees have no reply to submit and the matter would be further proceeded with on the basis of the evidence available on record. 5. SEBI advised NSE to serve the SCNs to the Noticees. NSE informed that it had attempted to hand deliver the SCNs to the respective Noticees at their last known addresses. However in all cases it was observed that the premises or offices of the Noticees were locked or the officials were not available at the location. Therefore the SCNs were affixed by NSE at the respective premises of the Noticees as per their last known addresses available with NSE. The details of the last known address of the Noticees where attempts were made by NSE to hand deliver the SCN and where SCN were affixed and date of affixture of such SCNs are given below: Name of the Stock Broker Private Limited Anee Securities Private Limited KSBL Securities Date of affixture of November 03 2021 November 12 2021 October 27 2021 1509 Maker Chambers V Nariman Point Mumbai Maharashtra 2 41Virat Khand Gomti Nagar Lucknow Uttar Pradesh 226010 Plot No. 1 NaherColony B H Water Filling Plant Dhankot Gurgaon Haryana 122001 4 Order against certain Stock Brokers Credential Stock Brokers Limited D 20 Mansarover Garden New Delhi East Delhi 110027 October 27 2021 6. Further SCNs were also published on the website of NSE under the header Home>Invest>Resources & Tools>Regulatory Actions>SEBI. 7. I note that till date of this order no reply has been received from the Noticees. In view of this I proceed to determine the matter on the basis of the material available on record. In this regard I have considered the SCNs the relevant provisions of law and other details available on record. 8. Before dealing with the SCNs it would be appropriate to refer to the relevant extract of the provisions of law involved in the matter. The relevant extract of the provisions of the SEBI Act 1992 Intermediaries Regulations 2008 and Broker Regulations 1992 is reproduced herein below: Relevant extract of the provisions of the SEBI Act 1992: “ 12. Registration of stock brokers sub brokers share transfer agents etc 3) The Board may by order suspend or cancel a certificate of registration in such manner as may be determined by regulations: Provided that no order under this sub section shall be made unless the person concerned has been given a reasonable opportunity of being heard …..” Relevant extract of the provisions of the Intermediaries Regulations 2008: “ .30A. Special procedure for action on expulsion from membership of all the stock exchange(s) or clearing corporation(s) or termination of all the depository participant agreements with depository(ies). On receipt of intimation from all the stock exchange(s) or clearing corporation(s) of which the stock broker or clearing member as the case may be was a member that such stock broker or clearing member has been expelled from its membership the Board may issue a notice to such stock broker or clearing member calling upon the noticee to make its submission(s) if any within a period not exceeding twenty one days from the date of service thereof through a written reply along with documentary evidence as to why the certificate of Order against certain Stock Brokers registration granted under the Act or the regulations made thereunder should not be cancelled. No opportunity of personal hearing may be granted while disposing of the proceedings under this regulation. After considering the facts and circumstances of the case material on record and the written submissions if any the Board shall endeavor to pass an order within twenty days from the date of receipt of written submissions The Board may while passing such order impose such conditions upon the person as it deems fit to protect the interest of the investors or its clients or the securities market. The Board may require the person concerned to satisfy the Board the factors as it deems fit including but not limited to the following the arrangements made by the person for maintenance and preservation of records and other documents required to be maintained under the relevant regulations b) redressal of investor grievances c) transfer of records funds or securities of its clients d) the arrangements made by it for ensuring continuity of service to the clients e) defaults or pending action if any …..” Relevant extract of the provisions of the Broker Regulations 1992: “ …..Conditions of registration. 9. Any registration granted by the Board under regulation 6 shall be subject to the following conditions namely a) the stock broker holds the membership of any stock exchange ..” I note that the Noticees are registered with SEBI as Stock Brokers and holding SEBI Certificate of Registration under the Broker Regulations 1992 and are members of the stock exchanges as mentioned in para 1 above. I note that the Certificate of Registrations have been granted by SEBI to the Noticees subject to the conditions of registration under Regulation 9 of the Broker Regulations 1992 which inter alia provides that the stock broker must be a member of a recognised stock exchange. Order against certain Stock Brokers 10. I note that the stock exchanges have informed SEBI that the Noticees were their membership by them and the same has been communicated to the Noticees as mentioned in para 2 above. Therefore I note that the Noticees are no longer holding membership of any recognized stock exchange. Thus the Noticees have ceased to satisfy the conditions of registration stipulated under Regulation 9 of Broker Regulations 1992. I note from paras 4 to 7 that the procedure as required for cancellation of registration as stipulated in the Intermediaries Regulations 2008 has been followed. In view of the above I find that the certificate of registration as stock broker granted to the Noticees under the SEBI Act 1992 and the Broker Regulations 1992 should be cancelled under Section 12(3) of the SEBI Act 1992 read with Regulation 30A of the Intermediaries Regulations 2008. 11. In view of the foregoing I in exercise of the powers conferred under Section 12(3) of the SEBI Act 1992 read with Section 19 of the SEBI Act 1992 and Regulation 30A of the Intermediaries Regulations 2008 hereby cancel the certificate of registration of Conard Securities Private Limited INZ000218639) Anee Securities Private Limited KSBL Securities Limited and Credential Stock Brokers Limited 12. Irrespective of the cancellation of certificate of registration the respective Noticees shall continue to be liable for anything done or omitted to be done as stock broker and continue to be responsible for payment of outstanding fees and dues and interest if any due to SEBI. 13. The main purpose of cancellation of certificate of registration as stock broker of the Noticees is to prevent the misuse of their certificate of registration with SEBI without being a member of a recognized stock exchange on unaware investors. Thus Noticee shall continue to be liable for any action initiated or to be initiated as if their certificate of registration has not been cancelled and this order does not absolve the Noticees from any Order against certain Stock Brokers violation of the securities laws committed by the Noticees as registered stock 14. The Noticees shall ensure to arrange for maintenance and preservation of records and other documents required to be maintained under the relevant regulations redressal of investor grievances transfer of records funds or securities of its clients continuity of service to its clients and necessary actions with respect to the defaults or pending action if any. 15. The Noticees shall abide by the provisions referred in Regulation 30Aof Intermediaries Regulations 2008. 16. This Order comes into force with immediate effect. 17. A copy of this order shall be served upon all the Noticees and the Recognized Stock Exchanges to ensure necessary compliances. Date: February 14 2022 Place: Mumbai ANANTA BARUA WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA Sd 