Order in the matter of Summary Proceedings against the Stock Brokers who defaulted In payment of Registration Fees
- Order No.WTM/MSS/MIRSD/53/2010
Ratio decidendi
The rule this decision rests on
A stock broker who has been declared a defaulter by its stock exchange and not readmitted within six months of that declaration, and who has also failed to pay the required fees to SEBI, is liable for action under regulation 27(ii) and (vii) of the SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992. Registration as a stock broker is conditional on the broker holding membership of a stock exchange and paying fees in the manner prescribed. Where a broker no longer satisfies these conditions under regulation 6A(1)(a) and (d), its certificate of registration is liable to be cancelled. Proceedings initiated under the repealed SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 may be concluded under the SEBI (Intermediaries) Regulations, 2008. The power to cancel registration may be exercised under section 19 of the SEBI Act, 1992, read with regulation 33B(5) and (6) of the 2008 Regulations. Where a stock broker's registration is cancelled and it is also registered as a sub-broker of a stock exchange subsidiary under the SEBI circular dated November 26, 1999, its sub-broker registration falls with it and is to be cancelled.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
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 Officers to conduct summary proceedings, interalia, against the following 20 stock brokers who had allegedly defaulted in the payment of registration fees: SL NO. NAME OF STOCK BROKER REGN. NO. STOCK EXCHANGE 1 Kirti Jethalal Shah INB010012711 BSE 2. Mukesh Manshukhlal Kothari INB010015816 BSE 3. Raman V Dalal INB010023211 BSE 4. Shah Suresh Damji INB010026619 BSE 5. Shailesh Harinarayan Bajaj INB010028617 BSE 6. Sharad Loknath Tibrewala INB010547226 BSE 7. Indo Shares & Fintrade Ltd. INB010722436 BSE 8. Kamal Binani INB010560214 BSE 9. Triumph Securities Ltd. INB010980535 BSE 10. T.H. Vakil Shares & Securities Pvt. Ltd. INB011047538 BSE 11. Jaydeep Pati Tripathi INB101157718 UPSE 12. Nidhi Goel INB100517110 UPSE 13. Neeraj Agarwal INB100943515 UPSE 14. Binod Kumar Jalan INB100562918 UPSE 15. Ajay Kumar Tulsyan INB100341116 UPSE 16. Kamal Kumar Jain INB100354818 UPSE 17. Bal Krishna Gupta INB100346219 UPSE 18. Atamjit Singh Juneja INB100345318 UPSE 19. Ashok Kumar Arora INB100344612 UPSE 20. Neelam Thukral INB100362017 UPSE
2. The Officers have submitted their reports in respect of the aforesaid 20 stock brokers recommending cancellation of certificates of registration granted to them as they have not paid the registration fees and they have been declared defaulters by their respective stock exchanges and have not been re-admitted.
3. I have considered the recommendations of the Officers. I note that the above mentioned stock brokers have been declared defaulters by the respective stock exchanges and not readmitted within six months from the date of such declaration. They have also failed to pay the required fees to SEBI. Therefore, they are liable for actions under regulation 27 (ii) and (vii) of the SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992.
4. Further, in terms of regulation 6A (1) (a) and (d) of the SEBI (Stock Brokers and Sub- Brokers Regulations), 1992, registration granted to a stock broker is subject to conditions that it holds the membership of stock exchange and pays the fees in the manner provided in the regulations. Since the above mentioned brokers no longer fulfill these conditions, their certificates of registration are liable to be cancelled.
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. 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 certificates of registration of the aforesaid 20 stock brokers.
7. I note that some of these stock brokers are registered as sub brokers of the subsidiaries of the Stock Exchanges in terms of Para 2 of the Circular No.SMD-II/POLICY/CIR- 37/99 dated November 26, 1999. In view of the cancellation as ordered in Para 6 above, their registration as sub-broker shall also be cancelled.
8. A copy of this Order shall be served on the respective Stock Exchanges of which these 20 stock brokers are members and /or sub brokers for necessary action.
9. This Order shall come into force on the expiry of 21 days from the date of this Order.
DATE : May 20, 2010 M. S. SAHOO PLACE: MUMBAI WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA
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