Order in the matter of summary proceedings against Securities Brokers of India Ltd
- Order No.WTM/MSS/MIRSD/69/2010
Ratio decidendi
The rule this decision rests on
A stock broker's obligation to pay registration fees is its own duty. It must compute and pay the fee, by the date and on the turnover basis prescribed in Schedule III, without waiting for a demand. The broker cannot escape liability by pleading that it received the fee statement years late and no longer has records to verify the claim, because the failure to pay on time is the breach. Under Regulation 10(2) of the SEBI (Stock Brokers and Sub-brokers) Regulations, 1992, SEBI may suspend the registration of a stock broker who fails to pay the fees required by the Regulations. Payment of fees in the manner prescribed is a condition of registration under Regulation 6A(1). A broker that has not paid therefore no longer satisfies a condition of its registration and is liable to action under Regulation 10(2) read with Regulation 27(vii). The enqu
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
WTM/MSS/MIRSD/69/2010 SECURITIES AND EXCHANGE BOARD OF INDIA, MUMBAI ORDER UNDER REGULATIONS 33A AND 33B OF THE SEBI (INTERMEDIARIES) REGULATIONS, 2008 IN THE MATTER OF SUMMARY PROCEEDINGS AGAINST THE STOCK BROKERS WHO DEFAULTED IN PAYMENT OF REGISTRATION FEES 1. Vide an Order dated August 11, 2005 under Regulation 16(1) of the extant SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002, SEBI had appointed an Officer to conduct summary proceeding against Securities Brokers of India Ltd. (SEBI Regn. No.190626130) who had defaulted in the payment of registration fees as a stock broker. The Officer has submitted the report recommending suspension of certificate of registration till such time the outstanding registration fees is paid in full. 2. I have considered the recommendation of the Officer. I note that the broker in its reply has stated that the fee statement has been received by it after an interval of 9-15 years and that it does not have records to verify the claim in view of sheer efflux of time. I, however, note that in terms of Regulation 10(1) of the SEBI (Stock Brokers and Sub-brokers) Regulations, 1992, every stock broker is required to pay fees as specified in Schedule III. The Schedule III requires a stock broker to pay the fees on or before the 1st October for the preceding financial year along with the computation of the fees with reference to the turnover. Thus, it is the duty of the stock broker to pay the fees in the manner prescribed in the regulations on its own. Securities Brokers of India Ltd. failed to do so for years.
3. Regulation 10(2) authorizes SEBI to suspend the registration of a stock broker who fails to pay the fees required under the Regulations. In terms of Regulation 6A (1), registration granted to a stock broker is subject to condition that it pays the fees in the manner provided in the regulations. Since Securities Brokers of India Ltd. has failed to pay the fees, it no more fulfils the condition of registration and it is, therefore, liable for the action under Regulation 10(2) read with Regulation 27(vii).
4. I note that the SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 have since been repealed and replaced by the SEBI (Intermediaries) Regulations, 2008.
5. In the facts and circumstances of the case, I, in exercise of the powers conferred upon me under Section 19 of the SEBI Act, 1992 read with Regulation 33B (5) and (6) of the SEBI (Intermediaries) Regulations, 2008, hereby suspend the certificate of registration of Securities Brokers of India Ltd. (SEBI Regn. No.190626130) till the time the outstanding registration fees is fully paid.
6. A copy of this Order shall be served on the Vadodara Stock Exchange of which the Securities Brokers of India Ltd. is a member for necessary action. 7. This Order shall come into force on the expiry of 21 days from the date of this Order.
DATE: September 17, 2010 M. S. SAHOO PLACE: MUMBAI WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA
This page reproduces a public judgment and a summary of it. It is research material, not legal advice, and it is no substitute for advice from an advocate on your own facts.
Research this judgment with Miss Lucy
Ask what it holds, what has followed it, and what it means for your matter — in plain English, with the citations.
Try Miss Lucy free