Order in the matter of summary proceedings against Spectrum Stock Services Private Limited

WTM/MSS/MIRSD/74/2010 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 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 Spectrum Stock Services Private Limited (SEBI Regn. No. INB200819634) (Spectrum) who had defaulted in the payment of registration fees as a stock broker. The Officer submitted the report recommending cancellation of certificate of registration. 2. I have considered the recommendation of the Officer. I note that Spectrum in its reply dated May 14, 2009 stated that it is not operating on the exchange for the last 14-15 years and hence it should not be liable to pay any registration fee. It also requested for waiver of the fee and cancellation of its registration.

3. I note that in terms of Regulation 10 (1) of the SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992 (Regulations), every stock broker is required to pay fees as specified in Schedule III. The Schedule III requires a stock broker to pay a fee of rupees five thousand for a financial year if its turnover during the year does not exceed rupees one crore. After the expiry of first five years from registration, a stock broker is required to pay rupees five thousand for every block of five years. Thus, it is clear that a stock broker is required to pay certain fees even if it does not carry on its operations. Further, 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. Under Regulation 27, a stock broker is liable for suspension or cancellation of its registration if it fails to pay fees as per Regulations. Since Spectrum has failed to pay the fees, it no more fulfils the conditions of registration and it is, therefore, liable for action, including cancellation of certificate of registration. I, therefore, agree with the recommendation of the Officer, particularly when Spectrum has requested for cancellation of its certificate of registration.

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. I, therefore, 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 cancel the certificate of registration of Spectrum Stock Services Private Limited (SEBI Regn. No. INB200819634) without prejudice to SEBI’s right to recover the outstanding registration fees from Spectrum. 6. A copy of this Order shall be served on the OTCEI, of which Spectrum 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 22, 2010 M. S. SAHOO PLACE: MUMBAI WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA