Order with respect to Sankalp Share Brokers Pvt. Ltd. in the matter of pyramid Saimira theatre Ltd.

Under Section 12(3) of SEBI Act and Regulation 28(2) of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008 in the matter of Sankalp Share Brokers Private Limited [SEBI Registration No. for NSE - INB 231250136] PAN: AAICS6652B. 1. Securities and Exchange Board of India (hereinafter referred to as "SEBI") conducted an investigation into the buying, selling and dealing in shares of Pyramid Saimira Theatre Ltd. (hereinafter referred to as ‘PSTL/company’) and passed an Ad-interim Ex-parte Order dated April 23, 2009 restricting certain persons / entities from buying, selling or dealing in securities market. Pursuant to said order of SEBI, it was observed that Sankalp Share Brokers Private Limited (hereinafter referred to as "Noticee") a SEBI registered Stock Broker executed trades on April 28, 2009 on behalf of its client viz., Mr. Amit Kumar Bagoria, who was restrained from buying, selling or dealing in securities market vide the aforesaid Order. 2. Subsequently, SEBI initiated proceedings under SEBI (Intermediaries) Regulations, 2008 (hereinafter referred to as 'Intermediaries Regulations') against the Noticee and appointed the Designated Authority ("DA") to enquire into the alleged violations of provisions of SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992 (hereinafter referred to as "Brokers Regulations").

3. The DA conducted the proceedings to enquire into the above mentioned allegations. The DA on completion of the proceedings submitted the Enquiry Report dated March 30, 2012 ("the Report") in terms of Regulation 27 of the Intermediaries Regulations.

4. In the Report, DA stated that the Noticee had violated Regulations 27 (xv) & 27(xvii) read with Regulations 26(xv) of Brokers Regulations and Clauses A(1), A(2) and A(5) of Code of Conduct for Brokers as specified in Schedule II under Regulation 7 of Brokers Regulations. On account of the violation, DA recommended that the Certificate of Registration of the Noticee may be suspended for a period of seven (7) days.

5. After considering the report, a Show Cause Notice dated April 17, 2012 ("SCN") under Regulation 28 of Intermediaries Regulations was issued to the Noticee to show cause as to why the appropriate penalty including the penalty as recommended by the DA should not be imposed upon it. A copy of the Report was also forwarded to the Noticee along with the said notice. However, no reply was received from the Noticee. Hence, a reminder was issued vide letter dated October 04, 2013. In response to the aforesaid letter, the Noticee vide letter dated October 28, 2013 replied to the said SCN and inter-alia submitted as under : a. "That they had applied for consent vide letter dated May 07, 2012 and assumed that the present proceedings were kept in abeyance till conclusion of consent proceedings; they had no intention of delaying/avoiding filing of reply. b. That the Ld. Designated Authority has failed to consider the fact that the client, Mr. Amit Kumar Bagoria has been trading through us since December 07, 2006 and in normal course of trading through us, his conduct never warranted any apprehension of any wrong doing or probable notice for debarment by SEBI; c. Though there was a lapse in forthwith deactivating the account of the client Mr. Amit Kumar Bagoria on April 23, 2009 i.e. on issue of the ad-interim ex-parte order of the WTM, SEBI, the same was rectified forthwith on coming of realization of the debarment.

When the said lapse was noticed, immediately took corrective action and deactivated the accounts of the debarred client; d. That the lapse if any was unintentional; e. The Ld. DA has failed to take note of the fact that we had immediately on knowledge of the lapse on 28.04.2009 had opted to square off the position of our client. The Designated Authority has failed to take note of the fact that no sooner did we realize that there was a lapse we froze the client's account; f. The Designated Authority has wrongly concluded in equating a genuine inadvertent lapse to pre mediated malafide intent; g. That the trades executed and the brokerage amount earned for the debarred client was only Rs. 30/- which may be considered as insignificant. h. That they have sufficiently upgraded its back office system to block such debarred entities in Client Debarred Entity Master. As soon as any such debarred client is found in the database, immediately those clients are suspended from trading through us. After updating of our systems no such instance has recurred since then;

i. That there is no major investigation/inquiry pending against us and have an impeccable clean track record while dealing with clients in broking business, in spite of our huge client base and network; j. That SEBI should impart fair justice and taking into account of the submissions as detailed herein above, the charges against us may be dropped forthwith."

6. Considering the reply, the Noticee was thereafter granted an opportunity of personal hearing and was advised to appear before me on December 16, 2013. The Noticee's Director viz., Mr. Abhishek Prahladaka appeared before me on the said date and reiterated the earlier submissions.

Consideration of Issues and findings:

7. I have considered the Enquiry Report dated March 30, 2012, the SCN dated April 17, 2012 issued by SEBI, the replies filed by the Noticee and the submissions made by its authorized representative during the course of personal hearing before me. It is pertinent to mention here that the Noticee had filed a consent application on May 17, 2012 and the same was rejected by the High Powered Advisory Committee vide minutes dated April 17, 2015. The rejection of consent application was communicated to the Noticee vide letter and e-mail dated April 27, 2015.

8. In view of the same, I shall proceed to deal with the charges alleged against the Noticee. As per the SCN, the Noticee had allegedly violated Clauses A(1), A(2) and A(5) of Code of Conduct for Brokers as specified in Schedule II under Regulation 7 of Brokers Regulations.

9. Before dealing with the aforesaid charges, the relevant legal provisions, the contravention of which have been alleged in this case may be reproduced hereunder for the purpose of reference :

Regulation 7 of Broker Regulations: Stock-Brokers to abide by Code of Conduct. The stock-broker holding a certificate shall at all times abide by the Code of Conduct as specified at Schedule II.

Relevant Clauses of the Code of Conduct, Schedule II Clause (1) Integrity: A stock-broker, shall maintain high standards of integrity, promptitude and fairness in the conduct of all his business.

Clause (2) Exercise Of Due Skill And Care: A stock-broker, shall act with due skill, care and diligence in the conduct of all his business.

Clause (5) Compliance With Statutory Requirements: A stock-broker shall abide by all the provisions of the Act and the rules, regulations issued by the Government, the Board and the stock exchange from time to time as may be applicable to him.

10. It is noted that the Noticee executed trades on April 28, 2009 for its debarred client viz., Mr. Amit Kumar Bagoria who was restrained from buying, selling or dealing in the securities market vide an Ad-interim Ex-parte Order dated April 23, 2009 issued by SEBI. It was admitted by the Noticee that the trades were executed as its administration dealer forgot to freeze the client account of Mr. Amit Kumar Bagoria and therefore, a transaction of buying 500 shares of Rolta India Limited was executed on April 28, 2009. It is noted from the submissions of the Noticee that the client position was squared off as soon as they noticed the said transaction and immediately deactivated the client account on the very same day i.e. April 28, 2009. On the basis of the admission by the Noticee that it had inadvertently carried out the trades on behalf of its client who was restrained from buying, selling or dealing in securities, it is obvious that the Noticee failed to exercise due skill, care and diligence in the conduct of its business and therefore, violated Regulations 7 of Brokers Regulations read with Clause A(1), A(2) & A(5) of Code of Conduct for Stock Brokers as specified in Schedule II of Brokers Regulations.

11. The next issue is the penalty that could be levied on the Noticee for the violations of the above mentioned provisions of the Broker Regulations. It is noted from the submissions of the Noticee that it had taken corrective steps as soon as it realized the mistake of having executed trades on behalf of the debarred client, the client's position was squared off on the same day. Further, it is also submitted by the Noticee that they have rechecked and improved their systems so that such recurrence does not happen.

12. Considering the abovementioned facts and circumstances of the present case, I am of the view that it would meet the ends of justice if a strong warning is issued to the Noticee for executing trades on behalf of the client who was debarred by the Ad-interim Ex-parte Order dated April 23, 2009 passed by SEBI thereby violating Clause A(1), A(2) & A(5) of Code of Conduct for Stock Brokers as specified in Schedule II under Regulation 7 of Brokers Regulations.

Order

13. I, therefore in exercise of the powers conferred upon me by virtue of Section 19 of Securities and Exchange Board of India Act, 1992 read with Regulation 28(2) of the Intermediaries Regulations, hereby warn the Noticee, to be careful and cautious in the conduct of its business and to adhere to and comply with all the statutory provisions while carrying out its activities in the securities market. Any future lapse on its part in complying with the said provisions shall invite stringent action.

Place: Mumbai S. RAMAN Date: October 28, 2015 WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA