Order in the matter of Summary Proceedings against Sterling Credit Capital Limited Who Defaulted in payment of Registration Fees

WTM/MSS/MIRSD/91/2011 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 Enquiry Officer (EO) to conduct summary proceeding against Sterling Credit Capital Limited (SEBI Regn. No.INB200601437) (Sterling) who had allegedly defaulted in the payment of registration fees as a stock broker. The EO, vide his report dated September 7, 2009, has recommended cancellation of certificate of registration of Sterling. I have considered the recommendation of the EO and the material available on record. 2. I note that Suryamani Financing Company Limited (SFCL) responded, vide its letter dated August 19, 2009, to the notice dated July 29, 2009 issued by the EO. It submitted that Sterling had merged with it from April 1, 2005 vide order dated December 18, 2006 sanctioned by the Hon’ble High Court of Calcutta. It further submitted that no outstanding fees were noticed in the books at the time of amalgamation and they had been told by the then management of Sterling that Sterling had surrendered its membership with OTCEI in 1997. OTCEI has, vide its mail dated August 26, 2009 to the EO, informed that it has no information about the merger of Sterling with SFCL. There were communications from Sterling / SFCL that they have surrendered the membership on November 23, 1996. However, they have not yet completed the procedure for surrender as per the byelaws of the Exchange. 3. I note that Sterling is registered with SEBI as a stock broker as on date. It has not yet surrendered its certificate of registration. It has not even completed the formalities of surrender of its membership of OTCEI. However, I note that it is no more in existence and the certificate of registration granted to it has, therefore, become infructous. 4. I note that in terms of Regulation 6A (1), registration granted to a stock broker is subject to the condition that it pays the fees in the manner provided in the regulations.

Regulation 10(1) of the SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992 (Regulations) requires a stock broker to pay fees as specified in Schedule III. The Schedule III requires a stock broker to pay the fees computed with reference to annual turnover of the preceding financial year by first day of October. Under Regulation 27(vii), a stock broker is liable for actions, including cancellation of registration, if it has failed to pay fees as per Schedule III. It is clear from the report of the EO and the records of SEBI that Sterling has not paid fees in accordance with the Regulations. It no more fulfils the condition of registration, and is, therefore, liable for cancellation of its registration as a stock broker under with Regulation 27(vii). 5. 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. 6. 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 cancel the certificate of registration of Sterling Credit Capital Limited (SEBI Regn. No.INB200601437). However, this order is without prejudice to SEBI’s right to recover the outstanding fees. 7. A copy of this Order shall be served on OTCEI of which Sterling Credit Capital Limited is a member for necessary action. 8. This Order shall come into force on the expiry of 21 days from the date of this Order.

DATE: February 25, 2011 M. S. SAHOO PLACE: MUMBAI WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA