Appeal No. 50 of 2014. Case: Indira Securities Pvt. Ltd. Vs Securities and Exchange Board of India. Securities and Exchange Board of India

Case NumberAppeal No. 50 of 2014
CounselFor Appellant: Mr. Simil S. Purohit and Mr. A.A. Mukri, Advocates and For Respondents: Mr. Shiraz Rustomjee, Senior Advocate and Mr. Manish Acharya, Advocate
JudgesJ.P. Devadhar, J. (Presiding Officer) and Jog Singh and A.S. Lamba, Members
IssueSecurities And Exchange Board Of India Act, 1992 - Sections 15A, 15HB, 15I
Judgement DateJune 23, 2014
CourtSecurities and Exchange Board of India


Jog Singh, Member

  1. The appellant is a company incorporated under the provisions of Companies Act, 1956, having its registered office at Mumbai. It is mainly acting as share broker and is a member of Bombay Stock Exchange (BSE) and National Stock Exchange of India Ltd. (NSE). In the present appeal, an order dated December 31, 2013 passed by SEBI is impugned by the appellant. By the said order, an aggregate penalty of ` 16 lac under Sections 15A and 15HB of the SEBI Act, 1992 has been imposed on the appellant for non compliance with the provisions of SEBI's circular dated December 3, 2009. This circular regulates the dealings between the clients and the stock brokers. It, inter alia, lays down that the actual settlement of funds and securities shall be done by the broker, within 24 hours or atleast once in a calendar quarter or month, depending on the preference of the client. It further lays down that while settling the account, the broker shall send to the client "a statement of accounts" containing an extract from the client ledger for funds and an extract from the register of securities displaying all receipts/deliveries of funds/securities. This statement shall also explain the retention of funds/securities and the details of the pledge, if any.

  2. Briefly stated the facts of the case are that the respondent with a view to carry out inspection of books of accounts, records and other documents of the appellant, addressed a letter on August 10, 2012 and alongwith the said letter inspection questionnaire was sent inter alia seeking information as to whether SEBI circular dated December 3, 2009 and May 13, 2011 with respect to quarterly settlement of funds and securities have been complied with.

  3. Appellant in response to SEBI's queries/questionnaire had submitted by email/letter dated 11th/17th August 2012 that it has implemented the provisions regarding running account settlement for its various clients with effect from July 10, 2010 and that authorizations in this regard had already been taken from the clients. Similarly, the appellant had taken a plea that the statement sent to its clients would show the retention of funds/securities regarding settlements. It was also specifically submitted by the appellant to the SEBI in the said letter/email that payment for funds/securities was done within a prescribed time and settlements of funds was done on monthly/quarterly basis. It was found to be a wrong submission reported to the...

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