Order against Atin Das sub-broker and family members Bani Das, Sudhir Ranjan Das and Biva Rani Das

1. The Securities and Exchange Board of India (hereinafter referred to as SEBI) had noticed that Mr. Atin Das (a sub-broker affiliated to VCK Share and Stock Broking Services Limited, Member, National Stock Exchange of India Limited) was mobilizing money by issuing pamphlets under a scheme called the Monthly Income Scheme (hereinafter referred to as MIS). The said pamphlets were issued in the name of DAS CO (share dealing centre) Bagnan North, Bagnan, Howrah, West Bengal, the proprietor of which was Mr. Atin Das. The pamphlets so distributed by Mr. Atin Das had promised assured returns and incentives to the investors. It was further noticed that the said pamphlets mentioned the name of Mr. Atin Das as a SEBI registered sub-broker, to make the scheme appear as genuine. In view of the above, SEBI conducted an inspection of the books of accounts of Mr. Atin Das (sub broker) at his office premises located at Bagnan, Howrah on July 12, 2006. Prima facie findings of the inspection revealed that Mr. Atin Das had collected money from investors and had been transacting in his name and also in the names of his family members, namely Mrs. Bani Das (wife of Mr. Atin Das), Mr. Sudhir Ranjan Das (father of Mr. Atin Das) and Mrs. Biva Rani Das (mother of Mr. Atin Das). As it appeared that the intention of Mr. Atin Das was to attract large number of unsuspecting investors into placing their money in the MIS by luring them of assured high returns and incentives, SEBI vide an order dated February 20, 2007, under Sections 11, 11B and 11D of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as SEBI Act), pending enquiry, directed Mr. Atin Das, Mrs. Bina Das, Mr. Sudhir Ranjan Das and Mrs. Biva Rani Das to cease and desist from accepting money from investors under the MIS. They were also restrained from buying, selling or dealing in securities market in any manner, directly or indirectly with immediate effect until further orders. Mr. Atin Das was further directed to refund all the moneys collected from investors under the MIS within a period of one month from the date of the said order.

2. Meanwhile, the findings of the inspection conducted in respect of the books of accounts of Mr. Atin Das (sub-broker) revealed prima facie violations of the provisions of the SEBI Act, Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) Regulations, 1992 (hereinafter referred to as Stock Brokers Regulations), Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) Rules, 1992 (hereinafter referred to as Stock Brokers Rules) and Securities and Exchange Board of India (Portfolio Managers) Rules, 1993 (hereinafter referred to as Portfolio Managers Rules). In view of the aforesaid allegations, the SEBI ordered an enquiry in terms of the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 (hereinafter referred to as the Enquiry Regulations) against Mr. Atin Das (sub-broker). Mr. Atin Das in his reply dated August 11, 2008 submitted that he is the only earning member of his family and that due to ‘nil income’ he is not able to maintain his family and not able to receive proper medical treatment. Mr. Atin Das further urged SEBI to remove the ‘suspension’ order and to allow him to ‘work’ in the stock market.

3. On completion of the aforesaid enquiry, SEBI vide an order dated November 04, 2008 found that Mr. Atin Das (sub-broker) was offering portfolio management services without any certificate of registration from SEBI and had thus violated the provisions of Section 12(1) of the SEBI Act read with Rule 3 of the Portfolio Managers Rules (now rescinded) and Regulation 3 of Portfolio Managers Regulations. It was found that Mr. Atin Das acted as a sub broker without obtaining a certificate of registration and thus had violated Section 12(1) of the SEBI Act read with Rule 3 of the Stock Brokers Rules (now rescinded). It was further found that the sub broker had failed to submit the relevant documents to the inspecting authority, thus contravening the provisions of Regulation 21(1) and Regulation 15(1)(b) read with Clause D(2) of the Code of Conduct as specified in Schedule II of the Stock Broker Regulations. After finding Mr. Atin Das guilty of the charges leveled against him, the enquiry proceeding initiated against him was disposed of by SEBI, vide order dated November 04, 2008.

4. In order to dispose of the present proceedings initiated against Mr. Atin Das and his family members pursuant to the interim order dated February 20, 2007, an opportunity of personal hearing was granted to Mr. Atin Das, Mrs. Bani Das, Mr. Sudhir Ranjan Das and Mrs. Biva Rani Das on December 09,2008 and May 08, 2009. Mr. Atin Das attended the hearing and made submissions on his behalf and on behalf of his family members. During the hearing on May 08, 2009, Mr. Atin Das submitted that there were no complaints against him from any investor. Further, as undertaken by him, Mr. Atin Das submitted an affidavit dated May 09, 2009 declaring that in terms of SEBI order dated February 20, 2007, he had repaid all the money collected under the MIS and that no amount is due to any investor as on date and that he would be responsible for any claim from any investor in that regard. He further submitted that the contents of the affidavit are true and he would be responsible for any mis-statement which was given in the said affidavit.

5. I note that Mr Atin Das and his family members were restrained from buying, selling or dealing in securities market in any manner directly or indirectly, with immediate effect until further orders by SEBI, vide an interim order dated February 20, 2007. The said restraint order is in force till date. Thus, as a consequence, Mr Atin Das and his family members (as stated above) have been prohibited from dealing in securities market for a period more than two years. Mr. Atin Das was also prohibited from functioning as a sub broker from February 20, 2007 till November 04, 2008. I further note from the affidavit of Mr. Atin Das dated May 09, 2009 that he had repaid all the money collected under the MIS and that no amount is due to any investor as on date. He had undertaken that he would be responsible for any claim from any investor. He had also undertaken that SEBI is at liberty to take further action if it receives any complaint from the investor regarding the non payment of money collected under the MIS Scheme as stated in the order of SEBI dated February 20, 2007. After carefully examining the case, the ex-parte interim order dated February 20, 2007, the replies and undertaking (affidavit of Mr. Atin Das dated May 09, 2009) given by Mr. Atin Das and the period of prohibition already undergone by Mr. Atin Das and his family members in terms of the aforesaid interim order, I deem it fit to dispose of the instant case in the interest of justice as ordered herein below.

6. In view of the aforesaid, I, in exercise of powers conferred upon me by virtue of Section 19 of the Securities and Exchange Board of India Act, 1992 read with Sections 11 and 11B of the Securities and Exchange Board of India Act, 1992, hereby pass the following directions:

i. The directions imposed vide Securities and Exchange Board of India order dated February 20, 2007 against Mr. Atin Das, Mrs. Bani Das, Mr. Sudhir Ranjan Das and Mrs. Biva Rani Das in so far as it restrains them from buying, selling or dealing in the securities market in any manner, directly or indirectly, are hereby vacated. ii. Mr. Atin Das, Mrs. Bani Das, Mr. Sudhir Ranjan Das and Mrs. Biva Rani Das shall not accept money from investors under the Monthly Income Scheme or by way of any other similar schemes in contravention of the Regulations framed under the Securities and Exchange Board of India Act, 1992 and/or any directions issued in this regard, in the interest of investors and the securities market. iii. Mr. Atin Das shall satisfy any rightful claim that may arise in future, if any, from any investor who had invested in the Monthly Income Scheme employed by Mr. Atin Das for mobilising funds from the public/investors.

7. The directions as contained in Paragraph 6 above shall come into force with immediate effect.

8. With the above directions, the present proceedings initiated against Mr. Atin Das, Mrs. Bani Das, Mr. Sudhir Ranjan Das and Mrs. Biva Rani Das, pursuant to the ad-interim ex-parte order dated February 20, 2007 is hereby disposed of.

K. M. ABRAHAM WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA Place: Mumbai Date: May 29, 2009