BEFORE THE ADJUDICATING OFFICER

SECURITIES AND EXCHANGE BOARD OF INDIA

[ADJUDICATION ORDER NO. NR/AO/1 /2015]
UNDER SECTION 15I OF SECURITIES AND EXCHANGE BOARD OF INDIA ACT,
1992 READ WITH RULE 3 OF SEBI (PROCEDURE FOR HOLDING INQUIRY AND
IMPOSING PENALTIES BY ADJUDICATING OFFICER) RULES, 1995
In respect of
M/s. Seema Securities Pvt. Ltd.(PAN: AACCS7683Q)
In the matter of
Inspection of Books of Accounts and Records
BACKGROUND
1. Securities and Exchange Board of India (hereinafter referred to as "SEBI") conducted an
inspection of M/s. Seema Securities Pvt. Ltd. (hereinafter referred to as "Noticee"), broker
of BSE having SEBI registration no. INB011067239 and Depository Participant of CDSL having
SEBI registration no. IN-DP-CDSL-130-2000, to look into the books of accounts and other
records. The inspection was conducted during March 08-12, 2010.
2. During the inspection it was observed that the noticee had failed in observing the applicable
provisions for conducting business as stock broker and depository participant. The following
non-compliances were observed:
Sr.
No.
1.

2.

3.

Non-Compliance

Provision(s) Violated

With regard to stock broking operations

Directors of noticee acting as its Regulation 15A of SEBI (Stock Brokers and Subsub-broker
brokers) Regulations, 1992 (hereinafter referred
to as "Broker Regulations")
Not segregating client and own Clause A(2) and A(5) of the Code of Conduct for
funds and undertaking client stock brokers laid down under Schedule II read
transactions from accounts with Regulation 7 of Broker Regulations
meant for business purposes
(hereinafter referred to as "Code of Conduct
ofBroker Regulations") and SEBI circular no.
SMD/SED/CIR/93/23321 dated November 18,
1993
Allotment of terminals to clients Clause A(2) and A(5) of the Code of Conduct for
stock brokers laid down under Schedule II read
with Regulation 7 of Broker Regulations and SEBI
circular no. SMDRP/POLICY/CIR-49/2001 dated

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4.

Allotment of terminals at its

remisiers' offices

5.

Operation of terminals by
entities other than employees

6.

Not having an exclusive e-mail ID

for redressal of investor
grievances

7.

Paying interest to clients on

credit balances maintained with
noticee

October 22, 2001 and BSE Notice no 2002121718 dated December 17, 2002
Clause A(2) and A(5) of the Code of Conduct for
stock brokers laid down under Schedule II read
with Regulation 7 of Broker Regulations and SEBI
circular no. SMDRP/POLICY/CIR-49/2001 dated
October 22, 2001 and BSE Notice no. 2004020513 dated February 5, 2004.
Clause A(2) and A(5) of the Code of Conduct for
stock brokers laid down under Schedule II read
with Regulation 7 of Broker Regulations and BSE
Notice No. 56712/99 dated July 20, 2000.
Clause A(2) and A(5) of the Code of Conduct for
stock brokers laid down under Schedule II read
with Regulation 7 of Broker Regulations and SEBI
circular
MRD/DoP/Dep/SE/Cir-22/06
dated
December 18, 2006.
Rule 8(1)(f) and 8(3)(f) of Securities Contracts
(Regulation) Rules, 1957

With regard to depository participant operations

1.
Not ensuring that in-person Clause 4 of Code of Conduct for Participants
verification has been carried out specified under Regulation 20A of SEBI
at the time of processing of (Depositories and Participants) Regulations 1996
account opening forms.
(hereinafter referred to as "DP Regulations")
read
with
CDSL
communiqu
no
CDSL/A&I/DP/978 dated October 22, 2007 and
CDSL Operating Instruction no. 2.4.8 issued under
Bye Law 4
2.
Not ensuring that all its branches Regulation 20(2) of DP Regulations read with
acting as collection centres are CDSL communiqu no CDSL/OPS/DP/252 dated
connected electronically or March 07, 2003
through back office with the
main DP office.
3.
Delaying the dispatch of Regulation 54(4) of DP Regulations and CDSL
dematerialization requests to Operating Instruction no. 4.4.15 issued under Bye
the RTI/STA
Law 4
4.
Not blocking lost requisition slips Clause 4 of Code of Conduct for Participants
in the system
specified under Regulation 20A of DP Regulations
read with SEBI circular no. SEBI/MRD/Dep/Cir03/2007 dated February 13, 2007
5.
Executing delivery instructions Clause 4 of Code of Conduct for Participants
without signature of Beneficial specified under Regulation 20A of DP Regulations
Owner on the requisition slip
read with SEBI circular no. SEBI/MRD/Dep/Cir03/2007 dated February 13, 2007

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6.

Not refunding credit balances to Clause 4 of Code of Conduct for Participants

clients at the time of closure of specified under Regulation 20A of DP Regulations
account
read with CDSL Bye Law 13.7 and CDSL operating
instruction no. 10.5.2 issued under Bye Law 4.2

3. In view of the above, it was alleged that the violations make the Noticee liable for monetary
penalty under Section 15HB of the Securities and Exchange Board of India Act, 1992
(hereinafter referred to as "SEBI Act"), Sections 19D and 19G of the Depositories Act, 1996
(hereinafter referred to as "Depositories Act") and under Section 23H of Securities
Contracts (Regulation) Act, 1956 (hereinafter referred to as "Securities Contracts Act")
APPOINTMENT OF ADJUDICATING OFFICER
4. The undersigned was appointed as Adjudicating Officer vide order dated March 16, 2011
under Section 15 I of SEBI Act read with Rule 3 of SEBI (Procedure for Holding Inquiry and
Imposing Penalties by Adjudicating Officer) Rules, 1995(hereinafter referred to as "Rules")
to inquire into and adjudge under Section 15HB of the SEBI Act, Sections 19D and 19G of the
Depositories Act and under Section 23H of Securities Contracts Act the violations alleged to
have been committed by the noticee.
SHOW CAUSE NOTICE, REPLY AND PERSONAL HEARING
5. Show Cause Notice (hereinafter referred to as "SCN") no. NRO/ADJ/NR/SSPL/26270/2011
dated August 16, 2011 was issued to the Noticee in terms of the provisions of Rule 4 of SEBI
(Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995
Rule 4 of Depositories (Procedure for Holding Inquiry and Imposing Penalties by
Adjudicating Officer) Rules, 2005 and Rule 4 of Securities Contracts (Regulation) (Procedure
for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 2005 , calling
upon the Noticee to show cause why an inquiry should not be held against it and why
penalty, if any, should not be imposed for the alleged violation as specified in the SCN.The
noticee vide letter dated September 08, 2011 filed its reply to the SCN and the same has
been dealt with in the later part of this order.In the interest of natural justice an
opportunity of personal hearing was granted to the Noticee on May 22, 2012 at SEBI,
Northern Regional Office, New Delhi.The noticee vide email dated May 18, 2012 submitted
that due to unavoidable circumstances its authorised representative will be unable to
appear for personal hearing on the specified date and sought extension of time for personal
hearing.Another opportunity of personal hearing was granted and the Noticee was advised
to appear for the same on November 27, 2012 at SEBI, Northern Regional Office, New
Delhi.Thenoticee vide email dated November 23, 2012 once again requested for extension
of time for personal hearing.Thus, a last opportunity for hearing was granted to the

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noticeeand the Noticee was advised to appear for the same on January 10, 2013 at SEBI,
Northern Regional Office, New Delhi.Mr. Shailendra Kumar Singh, Principal Officer of the
noticee and Mr. Rakesh Gupta, Authorised Representative for the Noticee (Noticee AR)
attended the hearing on January 10, 2013 and made written submissions on behalf of the
noticee that have been dealt with in later part of this order. The noticeealso made
submissions vide letter dated January 18, 2013 which has been dealt with later in this order.
CONSIDERATION OF ISSUES AND FINDINGS
6. I have carefully perused the charges leveled against the Noticee in the SCN, the reply of the
Noticee and the documents available on record. In the instant matter, the following issues
arise for consideration and determination:
a. Whether the Noticee has violated the provisions of the Regulation 15A of Broker
Regulations; Clause A(2) and A(5) of the Code of Conduct of Broker Regulations read with
SEBI circular no. SMD/SED/CIR/93/23321 dated November 18, 1993, SEBI circular no.
SMDRP/POLICY/CIR-49/2001 dated October 22, 2001, BSE Notice no 20021217-18 dated
December 17, 2002, BSE Notice no. 20040205-13 dated February 5, 2004, BSE Notice No.
56712/99 dated July 20, 2000, SEBI circular no. MRD/DoP/Dep/SE/Cir-22/06 dated December
18, 2006; Clause 4 of Code of Conduct for Participants specified under Regulation 20A of DP
Regulations read with CDSL communiqu no CDSL/A&I/DP/978 dated October 22, 2007 and
CDSL Operating Instruction no. 2.4.8 issued under Bye Law 4; Regulation 20(2) of DP
Regulations read with CDSL communiqu no CDSL/OPS/DP/252 dated March 07, 2003, read
with CDSL Bye Law 13.7 and CDSL operating instruction no. 10.5.2 issued under Bye Law 4.2;
SEBI circular no. SEBI/MRD/Dep/Cir-03/2007 dated February 13, 2007; Regulation 54(4) of
DP Regulations and CDSL Operating Instruction no. 4.4.15 issued under Bye Law 4; Rule
8(1)(f) and 8(3)(f) of Securities Contracts (Regulation) Rules, 1957
b. Does the violation on the part of Noticee attract monetary penalty under Section 15HB
of the SEBI Act, Sections 19D and 19G of the Depositories Act and under Section 23H of
Securities Contracts Act
c. If so, what should be the quantum of monetary penalty?
7. Before proceeding further, it will be appropriate to refer to the relevant provisions alleged
to have been violated by the noticee which read as under:
SECURITIES CONTRACTS (REGULATION) RULES, 1957
Qualifications for membership of a recognised stock exchange.

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8. The rules relating to admission of members of a stock exchange seeking recognition shall inter
alia provide that :
(1) No person shall be eligible to be elected as a member if
(a)
(b)
(c)
(d)
(e)
(f) he is engaged as principal or employee in any business other than that of securities [or
commodity derivatives] except as a broker or agent not involving any personal financial liability
unless he undertakes on admission to sever his connection with such business :
.
.
(3) No person who is a member at the time of application for recognition or subsequently admitted as
a member shall continue as such if
(a)
(b)
(c)
(d)
(e)
(f) he engages either as principal or employee in any business other than that of securities [or
commodity derivatives] except as a broker or agent not involving any personal financial liability,
provided that
Securities and Exchange Board of India (Stock Brokers and Sub-brokers) Regulations, 1992.
CHAPTER II
[Chapter II substituted by SEBI (Stock Brokers and Sub-brokers)(Second Amdt.) Regulations, 2013 w.e.f. 27.9.2013]

REGISTRATION OF STOCK BROKERS

Conditions of registration.
9. Any registration granted by the Board under regulation 6 shall be subject to the following
conditions, namely,(a)
(b)
(c)
(d)
(e)
(f) he shall at all times abide by the Code of Conduct as specified in Schedule II; and
(g)
[earlierRegulation 7 prior to SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2013]

SCHEDULE II: CODE OF CONDUCT FOR STOCK BROKERS[Regulation 9]

A. General.

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(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.
(3)
(4)
(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.
Director not to act as sub-broker.
15A. No director of a stock broker shall act as a sub-broker to the same stock broker
[Inserted by the SEBI (Stock Brokers and Sub-brokers) (Amendment) Regulations, 2003, w.e.f. 23-92003.]
Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996
[Regulation 20A]
[Substituted by "20A Grant of certificate of permanent registration" and included as "20AA Participants to abide by code of
conduct" as amended by the SEBI (Depositories and Participants) (Third Amendment) Regulations, 2003, w.e.f. 1-10-2003]

CODE OF CONDUCT FOR PARTICIPANTS

4. A Participant shall be prompt and diligent in opening of a beneficial owner account, dispatch of
the Dematerialisation Request Form, Rematerialisation Request Form and execution of Debit
Instruction Slip and in all the other activities undertaken by him on behalf of the beneficial owners.
Manner of surrender of certificate of security.
54. (4) The participant shall, within seven days of the receipt of certificate of security referred to in
sub-regulation (1) furnish to the issuer details specified in sub-regulation (2) along with the
certificate of security.
SEBI circular no.SMD/SED/CIR/93/23321dated November 18, 1993
Regulation Of Transactions Between Clients And Brokers
1. It shall be compulsory for all Member brokers to keep the money of the clients in a separate
account and their own money in a separate account. No payment for transactions in which the
Member broker is taking a position as a principal will be allowed to be made from the clients
account. The above principles and the circumstances under which transfer from clients account to
Member brokers account would be allowed are enumerated below.
A] Member Broker to keep Accounts: Every member broker shall keep such books of accounts, as
will be necessary, to show and distinguish in connection with his business as a member i. Moneys received from or on account of each of his clients and,
ii. the moneys received and the moneys paid on Members own account.

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B] Obligation to pay money into "clients accounts". Every member broker who holds or receives
money on account of a client shall forthwith pay such money to current or deposit account at bank to
be kept in the name of the member in the title of which the word "clients" shall appear (hereinafter
referred to as "clients account"). Member broker may keep one consolidated clients account for all
the clients or accounts in the name of each client, as he thinks fit: Provided that when a Member
broker receives a cheque or draft representing in part money belonging to the client and in part
money due to the Member, he shall pay the whole of such cheque or draft into the clients account and
effect subsequent transfer as laid down below in para D (ii).
C] What moneys to be paid into "clients account". No money shall be paid into clients account other
than i. money held or received on account of clients;
ii. such money belonging to the Member as may be necessary for the purpose of opening or
maintaining the account;
iii. money for replacement of any sum which may by mistake or accident have been drawn from the
account in contravention of para D given below;
iv. acheque or draft received by the Member representing in part money belonging to the client and
in part money due to the Member.
D] What moneys to be withdrawn from "clients account". No money shall be drawn from clients
account other than i. money properly required for payment to or on behalf of clients or for or towards payment of a debt
due to the Member from clients or money drawn on clients authority, or money in respect of which
there is a liability of clients to the Member, provided that money so drawn shall not in any case
exceed the total of the money so held for the time being for such each client;
ii. such money belonging to the Member as may have been paid into the client account under para 1
C [ii] or 1 C [iv] given above;
iii. money which may by mistake or accident have been paid into such account in contravention of
para C above.
SEBI circular no. SMDRP/POLICY/CIR-49/2001dated October 22, 2001
Sub.: Advertisement by brokers/ sub-brokers and grant of trading terminals.
Grant of trading terminals
It has further come to the notice of SEBI that the trading terminals granted to the stockbrokers at
various locations are being mis-utilised for unregistered sub-broking activities. In view of the above,
Exchanges are advised to grant trading terminals only at the members registered office, branch
offices and their registered sub-brokers offices. Trading terminals granted earlier in places other
than mentioned above should be withdrawn immediately. The Stock Exchanges shall amend their
bye-laws accordingly to take action against the broker who mis-utilises or lets misutilisation of their
trading terminals for unregistered sub-broking activities.

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SEBI circular MRD/DoP/Dep/SE/Cir-22/06 dated December 18, 2006.

Sub: Exclusive e-mail ID for redressel of Investor Complaints.
4. Accordingly, all the stock exchanges/registered brokers/registered sub- brokers/listed
companies/depositories/registered depository participants are advised to designate an e-mail ID of
the grievance redressel division/compliance officer exclusively for the purpose of registering
complaints by investors. The above entities are also advised to display the email ID and other
relevant details prominently on their websites and in the various materials/pamphlets/advertisement
campaigns initiated by them for creating investor awareness.

SEBI circular no. SEBI/MRD/Dep/Cir-03/2007 dated February 13, 2007

Safeguards to address the concerns of the investors on transfer of securities in dematerialized
mode
2. Based on the recommendations of the SMAC and in consultation with the depositories, it has been
decided to put in place the following safeguards to address the concerns of the investors on the
captioned subject :
(d) If the DIS booklet is lost / stolen / not traceable by the BO, the same must be intimated to the DP
immediately by the BO in writing. On receipt of such intimation, the DP shall cancel the unused DIS
of the said booklet.
(e) .
(f) .
(g) The DPs shall put in place appropriate checks and balances with regard to verification of
signatures of the BOs while processing the DIS.

BSE Notice No. 56712/99 dated 20 July 2000

Revised application procedure for VSATs.
2. In accordance with the regulations in force, an office shall be considered as a member office only
if it is rented / owned / leased / licensed by a BSE member. Further, the staff operating BOLT
terminal in the member office must be on member`s payroll. In fact the member should have effective
control over the functioning of that office.

BSE Notice no. 20021217-18 dated 17th December, 2002

Reminder SEBI Circular on grant of Trading Terminals
Members of the Exchange are requested to refer to Notice no.104616 dated 12 th November, 2001
regarding SEBI Circular no. SMDRP/Policy/Cir-49/2001 dated 22nd October, 2001 on grant of
Trading terminals, which stipulated that the members should install trading terminals only at

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members registered offices, branch offices and their registered sub-brokers offices and they should
not allow the trading terminals to be misutilised for unregistered sub-broking activities. The
members were also advised vide the aforesaid notice that the trading terminals, if any, granted
earlier in places other than the above mentioned places, should be withdrawn immediately and that
they must ensure that such errors do not occur in future.

Members were also informed vide above referred notice dated 20th July, 2000 that in accordance
with the regulations in force, an office would be considered as a member's office only if it is
rented/owned/leased/licensed by a BSE member. Further, the staff operating BOLT terminal in the
member's office must be on the member's payroll. Similar conditions are also applicable in case of
registered sub-brokers affiliated to the members.
BSE Notice no. 040205-13 dated 5th February 2004
Operate of Bolt terminals by Remisier
Members of the Exchange may kindly note that the Governing Board has authorisedRemisiers to
operate BOLT terminals at members office only. However it is clarified that at present, BOLT
terminals cannot be installed at Remisiers Office in view of SEBI circular no SMDRP/Policy/Cir49/2001 dated October, 22, 2001 which states that BOLT terminals should be installed at Members
Offices or their associated Sub-Brokers offices only.
CDSL communiqu no CDSL/OPS/DP/252 March 7, 2003
2. In the above context, SEBI has advised depositories to ensure that all the branches of DPs have
electronic linkage with the main DP centre. All CDSL DPs may, therefore, note that if they are
having any collection branch without electronic linkage with main DP or electronically connected
branch through back office software, it should immediately convert itself into either direct
electronically connected branch, if it is commercially viable proposition to do so or have it linked
with the main DP centre electronically connected through back office software before 01-04-2003
and send their confirmation to us.

CDSL communiqu no CDSL/A&I/DP/978 dated October 22, 2007

In-Person Verification of Applicants at The Time of Opening Demat Accounts of Non Body
Corporates
SEBI, vide its letter dated October 17, 2007, has directed depositories to advise their DPs to conduct
in person verification of the applicants at the time of opening demat accounts. DPs are advised to
take a note of the amended process of verification for strict compliance.

CDSL OPERATING INSTRUCTIONS FOR DEPOSITORY PARTICIPANTS

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2.4.8 In-person verification:

2.4.8.1 The authorized official of the DP shall personally verify the photograph(s) affixed in the
account opening form and proof of identity document(s) with the person concerned, before opening
the account of non-body corporate.
4.4.15 DRF along with the security certificates must be forwarded to the Issuer/RTA within 7 days
from the date of receiving physical documents from the BO.
10.5.2 The Account shall be closed by the CDSL system only when all the balances in the account are
Zero.

8. I have carefully perused the written submissions of the Noticee, the copy of the documents
submitted by the Noticee and the materials available on record. The allegations against the
Noticee, reply of the Noticee and my findings thereon are discussed as under:
VIOLATIONS RELATED TO STOCK BROKING OPERATIONS
Directors of noticee acting as its sub-broker
9. During the inspection it was observed that the broker was trading though various subbrokers. Upon perusal of the details of the sub-brokers of the noticee it was seen that one
of its sub broker M/s Gee Kay Stock & Shares Ltd. (GKSSL) is also a group company of
noticee. Further it was observed that the directors of GKSSL are the same as that of the
noticee.The noticee in reply to the SCN submitted that they have applied to BSE for
surrender of Sub-broker registration of GKSSL with immediate effect. A copy of the letter for
surrender of Sub-broker registration of GKSSL was also submitted. The noticee further
submitted that there was no investor complaint in this regard for any misuse of the system
or nothing unwarranted done against the investors interest.The noticee at the time of the
personal hearing submitted that appointing common directors between GKSSL and the
noticee was not done intentionally and was a mistake due to lack of knowledge in the year
2000 and misinterpretation of regulations. Further the noticee submitted that sub
brokership application form with all documents and details of directors were submitted to
BSE in the year 2000 and that both BSE as well as SEBI had approved application for sub
brokership of GKSSL. I have perused the submission of the Noticee. The noticee's assertion
that BSE as well as SEBI had mistakenly approved the application of GKSSL despite it having
common directors with the noticee is grossly inappropriate.I note that Regulation 15A of
the Broker Regulations were inserted by the SEBI (Stock Brokers and Sub-brokers)
(Amendment) Regulations, 2003, w.e.f. 23-9-2003. Thus it was only from 23.09.2003
onwards that the provision of no common directorship between broker and sub broker
became applicable. Being a stock broker with regular business operations it is incumbent
upon the noticee to take note of changes in the provisions applicable to its business and
hence, it cannot plead lack of knowledge or misinterpretation of the regulations. Moreover

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surrender of Sub-broker registration of GKSSL does not absolve the noticee of the violation
of Regulation 15A of the Broker Regulations which continued for a period of over 6 years
from Sept. 2003 till March 2010 when the inspection was conducted. I thus find that the
Noticee has violated Regulation 15A of the Broker Regulations.
Not segregating client and own funds and undertaking client transactions from accounts
meant for business purposes
10. The inspection report noted that though there were separate bank accounts earmarked by
the noticee for its business operations and clients transactions, it was observed that proper
funds segregation was not being maintained. Scrutiny of the bank account no.
2426257060189 maintained with Canara Bank, Mumbai (BA2011) which is earmarked for
client accounts, revealed that payments were being made to meet the business expenditure
of the member from the said account. Further, instances of transferring the funds for
Commodity / Currency segment were also observed.The noticee vide letter dated Sept. 08,
2011 in reply to the SCN submitted that "entries, in F.Y. 2008-09 and F.Y. 2009-10 in bank
a/c no. 2426257060189 was our business account to meet the Bombay branch and
exchange expense but our some clients of Mumbai region have deposit their funds wrongly
and branch manager issued cheques to client from the same account. Due to oversight of
our branch manager such transaction had taken place. Now inspection onwards we
immediately stop transfer and receipt of funds from clients in this bank account. We request
you to take a lenient view in this regard." .Thereafter the noticee through its AR at the time
of the personal hearing submitted that, "......We have taken short term loan from our group
company M/s A G Shares and Securities Ltd. (which is not our client) whenever we were
having funds shortfall to meet our exchange obligation. It is pertinent to mention here that
member have to met out funds obligation toward to exchange on settlement day
irrespective of available funds in client bank account. Whenever client payments were not
get cleared on settlement day, we have to fulfill exchange obligation from our own source.
Therefore we have taken short term loan from our group companies to met out exchange
obligation. We have paid short term loan as per availability of funds from time to time to
M/s A G Shares & Securities Ltd. .................we would invite your attention to the Annexure
X(a) and X(b) enclosed in SEBI inspection report where it was mentioned that the transaction
was taken place between our Canara bank account with client (M/s A G Shares and
Securities Ltd.). Transaction related to other clients was neither done nor observed by the
inspection team and not mentioned in the above said Annexure. M/s A G Shares & Securities
Ltd. is not our client. Therefore it is clear that own business account was not used for client
transactions and the client money were segregated properly with our own money."
11. I have perused the submissions of the noticee as well as the relevant portion of the
inspection report. Before dwelling on my findings it is important to refer to financial ledger

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referred to in the inspection report. An extract of financial ledger referred to as the client
account at the time of inspection of the noticee is reproduced below:
Client : BA2011 CANARA BANK,MUMBAI A/C NO.2426257060189
Date
12-03-2009
13-03-2009
16-03-2009
16-03-2009
18-03-2009
19-03-2009
23-03-2009
23-03-2009
24-03-2009
24-03-2009
24-03-2009
26-03-2009
26-03-2009

Bill.No
BRV10-1203
BPV6-1303
BPV5-1603
BRV13-1603
BRV12-1803
BPV6-1903
BPV7-2303
BRV13-2303
BPV7-2403
BPV7-2403
BRV7-2403
BPV4-2603
BRV7-2603

Particulars
GEE KAY STOCK & SHARES LTD
CANARA BANK (A/C NO.100027)
CANARA BANK (A/C NO.100027)
A.G SHARES & SECURITIES LTD
A.G SHARES & SECURITIES LTD
CANARA BANK (A/C NO.100027)
A.G SHARES & SECURITIES LTD
CANARA BANK (A/C NO.100027)
A.G SHARES & SECURITIES LTD
A.G SHARES & SECURITIES LTD
CANARA BANK (A/C NO.100027)
G K STOCK & SHARES LTD
CANARA BANK (A/C NO.100027)

Debit
450000.00
0.00
0.00
3100000.00
1100000.00
0.00
0.00
400000.00
0.00
0.00
8500000.00
0.00
600000.00

Credit
0.00
450000.00
3100000.00
0.00
0.00
600000.00
400000.00
0.00
1000000.00
7500000.00
0.00
600000.00
0.00

12. The noticee had initially submitted that the account was actually its business account into
which some of the clients mistakenly deposited funds and payments were also made to
clients from this account by mistake. In this regard I observe that SEBI circular no.
SMD/SED/CIR/93/23321 dated November 18, 1993 at Para 1D(iii) allows for a situation
where money gets deposited by mistake into the clients' account in contravention of the
provisions of the circular. However, on perusal of the ledger attached with the inspection
report I observe that the payments were made for a period of 2 years. The noticee's
assertion that it was by mistake that the business account was informed to be the clients'
account and that payments to clients were made erroneously from this account appears to
be an after-thought pursuant to the violation brought out in the inspection report. It
appears that these payments were a routine practice and therefore I am not inclined to
accept the explanation provided by the noticee.
13. Thereafter at the time of the personal hearing the AR of the noticee without making any
assertion whether the bank account was client account or business account stated that
transactions were made only with group companies. These transactions were in the nature
of short term loans that were taken from its group concerns required for meeting exchange
obligations of the clients. Firstly, this submission is in complete contradiction of the
noticee's earlier submission made vide letter dated Sept. 08, 2011 in reply to the SCN.
Secondly, even if noticee's stand regarding short term loans taken from group companies
were construed to be correct still such transactions with group companies of the noticee in
the clients' account are in contravention of the provisions of SEBI circular no.
SMD/SED/CIR/93/23321 dated November 18, 1993.

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14. I thus find that the noticee has failed to maintain segregation between own funds & client
funds and has violated the provisions of Clause A(2) of Code of Conduct for brokers laid
down under Schedule II specified under Regulation 7 of Broker Regulations read with SEBI
Circular no SMD/SED/CIR/93/23321 dated November 18, 1993.
Allotment of terminals to clients
15. At the time of inspection it was observed that the noticee had allotted / granted terminals
at its clients' addresses. In the inspection report it has been brought out that these locations
were shown as the branch offices of the noticee. For verification, the lease / rent
agreements for these premises were sought on a sample basis from the noticee during the
inspection. An examination of the same revealed various inconsistencies in the agreements
thereby suggesting that the noticee had installed its terminals at the premises of its clients
mentioning the same as its branches.
16. The noticee has stated that, "allegation of non-compliance was based merely on the ground
of common address of client and our terminal location. Our all trading terminals are
installed either in our own office (main office and branches) where only our staff were
authorized to operate trading terminals or in our registered sub broker office. We would also
like to highlight that SEBI/Exchange has never prohibited to get the premises on rent / lease
from their clients or relative of clients..it is clear that SEBI/Exchange has not imposed
any restriction to get the premises on rent from relative of clients. And we have got the
premises from the relative/landlord of clients on rent to run our branches by executing rent
agreement with landlord. We have paid them rent in due course as per our mutual terms
and conditions." The noticee vide letter dated August 25, 2010 submitted to SEBI that,
"During the F.Y. 2009-10 we have paid rent to 7 licensors of various branches, in this regard
we had already submitted copy of respective ledgers indicating the payment of rent to these
entities during 2009-10. Our company is having the policy to pay the rent to the licensors at
the end of the financial year and all the licensors agreed on it. We are enclosing copy of rent
payable account, through which rent paid to licensors. Some of the licensors has authorised
us to adjust the rent amount through their security margin account for trading purpose. The
noticee has also submitted, at the time of the personal hearing, details of the landlord from
whom the office premises has been taken on rent.
17. I have perused the inspection report as well as the response of the noticee with regard to
the alleged violation that they have granted terminals to its clients. In this regard I note
from the BSE Notice no. 20021217-18 dated 17th December, 2002 that "an office would be
considered as a member's office only if it is rented/owned/leased/licensed by a BSE
member." The noticee has contended that SEBI or BSE does not expressly prohibit leasing of
premises from either clients/their relatives. However, on perusal of the inspection report I

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observe that the issue is in line with the inconsistencies observed in the lease agreements. I
have perused the copies of the lease agreements submitted before me by the noticee. As
observed in the inspection report I also note that some of the lease agreements have not
been entered on a stamp paper and the details such as name of owner / consideration /
period of agreement are incomplete.
18. Further, as regards the actual payment of rent the noticee has submitted that it was
mutually decided between noticee and lessors that rent payable would be adjusted in the
trading account of the client.
19. However, barring the inconsistencies there is no material before me to reasonably prove
that the noticee had provided terminals to its clients.
20. I thus find that alleged violation by the noticee of Clause A(2) and A(5) of the Code of
Conduct for stock brokers laid down under Schedule II read with Regulation 7 of Broker
Regulationsread with SEBI circular no. SMDRP/POLICY/CIR-49/2001 dated October 22, 2001
and BSE Notice no. 20040205-13 dated February 5, 2004 cannot be held in this instance.
Allotment of terminals at its remisiers' offices
21. The inspection report found that trading terminals had been allotted to its remisiers. In this
regard the inspection report made the following observations:
i.

one of the terminals had been allotted by the broker at the office of its remisier,
namely, ShriDevendra K Varshney, at Shop No.-35, Sai Complex, 3 Cement Road,
Dehradun-248001. (CTCL ID 2820020035001000)

ii.

Further, from the ledgers of the remisiersShriAshish Jain and ShriKanhaiyaRastogi it

was observed that VSAT expenses were being debited to the said accounts indicating
that terminal had been allotted to the said remisier.

iii.

The broker had in the pre-inspection information submitted the addresses of the
above remisiers as its own branch offices. However, a perusal of the leave and
license agreement entered into by the member for the said premises indicated that
the same were not proper / complete and had not been entered on a stamp paper.
Hence these could not be treated as authentic.

22. The noticee's AR at the time of the personal hearing submitted, "We would like to clarify
that we have not allotted terminals to remisiers but we have taken their premises on rent to
run our branch office and also authorised them to operate from our office as per exchange
norms. The remisiers are not prohibited to operate from member main or branch office or
there were not any restriction to get premises of remisiers on rent. Therefore merely on the
ground of the common address of the remisiers and our branch office, it is not correct to

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alleged that we have allotted terminal to remisiers. Further we would also like to submit
that we have appointed our own dealer to operate trading terminal installed at our branch
office premises taken on rent from our remisier."
23. I have perused the findings of the inspection as well as the reply furnished by the noticee.
The noticee has submitted before me that the terminals located at the remisiers' officers
are operated by the employees of the noticee hence they cannot be alleged to have allotted
terminals to its remisiers. However, this information has not been provided at any stage
before the personal hearing i.e. at the time of submission of the pre-inspection
questionnaire or at the time of the inspection, at the time of filing response to the
communication of findings of the inspection or in reply to the SCN. Here I would also like to
note that even though presently the noticee's employees may be operating the terminals
located at the remisiers' premises but clearly this was not the case at the time of the
inspection otherwise the noticee would have clarified its stand in the various submissions
made by it. Thus I can safely conclude that the submissions of the noticee at the time of the
personal hearing by its AR are merely after thoughts to justify the violations committed by
the noticee.
24. Therefore I find that the noticee has violated Clause A(2) and A(5) of the Code of Conduct
for stock brokers laid down under Schedule II read with Regulation 7 of Broker Regulations
read with SEBI circular no. SMDRP/POLICY/CIR-49/2001 dated October 22, 2001 and BSE
Notice no. 20040205-13 dated February 5, 2004 by granting terminals to its remisiers.
Operation of terminals by persons other than employees
25. During the inspection it was observed that certain users of the terminals of the noticee
were not it's employees / on its payrolls. The noticee has submitted the users of the
terminals that are alleged to not be on the noticee's payrolls are employees of its sister
concern A.G. Shares and Securities Ltd., NSE member. The company has further stated that,
"Due to closely held group companies and same nature of activity we are allotting the
terminals of BSE and NSE simultaneously to all of our branches and sub-brokers. In such a
small level of operations separate demarcation of employees for operating the terminal is
not economically feasible." The noticee has also requested to consider that it is not
economically feasible to have separate employees for NSE and BSE.
26. On perusal of the noticee's reply I observe that while it is understandable that due to cost
economies the noticee may have felt it feasible to have common employees with its sister
concern. However, by doing so it is in violation of BSE notice no. 56712/99 dated July 20,
2000 which states that "the staff operating BOLT terminal in the member's office must be on
the member's payroll." Thus byallowing persons that are not its employees/ on its payroll to

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operate its terminals the noticee has violated Clause A(2) and A(5) of the Code of Conduct
for stock brokers laid down under Schedule II read with Regulation 7 of Broker
Regulationsread with BSE Notice No. 56712/99 dated July 20, 2000.
Not having an exclusive e-mail ID for redressal of investor grievances
27. It was observed at the time of inspection from the client registration forms / contract
notes/ website that the noticee had not created a separate e-mail ID for lodging of investor
complaints. The noticee has submitted that they have a designated an email id
investorgr@agsslagra.comfor the purpose of registering complaint by investors and that the
same has been displayed on its website. At the time of the personal hearing it was
submitted that that at the time of inspection the noticee had old KYC kit which did not
include the email id. It was further submitted that the new KYC kits included the email id.
28. The noticee has not contested the observation in the inspection and by its own admission it
had not displayed the email id designated for redressal of investor grievances on client
registration forms / contract notes/ website. There appears no apparent reason why the
contract notes could not carry the email id even after almost 4 years of the issue of the
circular.Thus by not displaying exclusive e-mail ID for redressal of investor grievances on its
client registration forms / contract notes/ website the noticee has violated Clause A(2) and
A(5) of the Code of Conduct for stock brokers laid down under Schedule II read with
Regulation 7 of Broker Regulationsread with SEBI circular MRD/DoP/Dep/SE/Cir-22/06 dated
December 18, 2006.
Paying interest to clients on credit balances maintained with noticee
29. The inspection report noted that the noticee was charging an interest @2% per month from
its clients who had failed to meet the pay-in / margin obligation due to the Member on the
due date. The same was also included under the Operative Clauses as part of the Member
Client Agreement entered into between SSPL with his clients. The inspection report further
observes that examination of the client ledgers of the noticee indicated that certain interest
was also being paid to its clients. On enquiry it was informed that w.e.f. 2009-10, noticee
was paying to its clients an amount of interest @15% p.a. (approx.) on the additional funds
kept by the clients with the broker. However, there was no written authorization in this
regard available. At the time of the personal hearing authorised representative of the
noticee submitted that the noticee was "charging interest on the amount of delayed
payment received from clients as per policy and procedures. Later in 2009, client has
requested us to consider the available free credit amount lying in their account under
running account authorisation. We have taken the client request in positive spirit under our
investor friendly motto and decided to consider the available free credit balances of client

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while debiting the delay payment charges. In this regard we have two option to give the
benefit on credit amount of the clients a)to adjust the interest on credit amount with the
interest on debit amount b) to give the separate credit entry of interest on credit amount.
We believe in transparency and decided to give the interest on credit amount of the client
separately. You may also appreciate that our policy & procedures in respect of interest
charged on delayed payment or interest given to clients on their credit balance was
endorsed by SEBI vide point no 8(d) of Annexure A of SEBI circular MIRSD/ SE /Cir-19/2009
dated December 3, 2009 which says " There shall be a mandatory document dealing with
policies and procedures for each of the following under appropriate headings:
d. imposition of penalty/delayed payment charges by either party, specifying the rate and
the period (This must not result in funding by the broker in contravention of the applicable
laws) ". The interest charged/paid on debit/credit balances to clients was incidental &
ancillary of our security market business policy and our policies and procedures were based
on the basic guidelines of SEBI. Further we would also like to submit that we have stopped
paying the interest on credit balances to the clients as per our modified policy and
procedures."
30. I have considered the inspection findings and the submissions of the noticee. The noticee
has not contested that certain interest was being paid to clients that had a credit balance in
their accounts. However, I note that the inspection observation was highlighting that while
penalty charged from clients for debit balance has been specified in the Operative Clauses
as part of the Member Client Agreement, the interest paid to the clients has not been
specified anywhere. The SEBI circular MIRSD/ SE /Cir-19/2009 dated December 3, 2009
quoted by the noticee in its defence itself states that "There shall be a mandatory document
dealing with policies and procedures.". Thus the issue is not with interest being paid to
clients but the absence of a standard policy for an important pecuniary function of the
noticee. Thus by paying interest to clients on credit balances maintained with noticee it has
violated Rule 8(1)(f) and 8(3)(f) of Securities Contracts (Regulation) Rules, 1957.

VIOLATIONS RELATED TO DEPOSITORY PARTICIPANT OPERATIONS

Not ensuring that in-person verification has been carried out at the time of processing of
account opening forms
31. At the time of the inspection certain instances of demat account opening were observed
where in-person verification had not been carried out by the noticee's own staff. The
noticee at the time of the personal hearing has submitted that as they are depository

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participant of CDSL and NSDL under different companies of their group hence they have
certain staff that is common to both its group companies. They have further submitted that
in the instances brought out in the inspection report the in-person verification prior to
opening of demat account was carried out by the staff of their group company and that
such practice has been adopted as a cost cutting policy due to the market downturn. The
noticee has not contested the allegation that the person carrying out in person verification
prior to demat account opening were not its own employees. It has instead submitted that
the verification was done by staff of its group company. I note that CDSL Operating
Instruction 2.4.8 states that, "The authorized official of the DP shall personally verify the
photograph(s) affixed in the account opening form and proof of identity document(s) with
the person concerned, before opening the account of non-body corporate." Hence in view
of the CDSL operating instructions I am of the view that by utilizing staff of its group
companies for in person verification prior to opening demat account the noticee has not
violated the CDSL operating instruction 2.4.8. Thus as alleged in the inspection report by not
using own staff for in-person verification (instead using staff of group company) and
consequent violation of Clause 4 of Code of Conduct for Participants specified under
Regulation 20A of DP Regulations read with CDSL communiqu no CDSL/A&I/DP/ 978 dated
October 22, 2007 and CDSL operating Instruction no. 2.4.8 issued under Bye Law 4 cannot
be held in this instance.
Not ensuring that all its branches acting as collection centres are connected electronically
or through back office with the main DP office
32. It was observed during the inspection that the DP was receiving account opening forms,
demat requests, instructions and other requests from the branches of its trading operations
and these branches were working as collection centre for the DP operations. Account
opening forms, demat requests, instruction slips and other requests submitted by the
clients at the collection centers are forwarded to the main DP office for further processing.
However, it was observed that collection centers of the DP were connected neither through
direct electronic connection nor as back office with the main DP office. The noticee in its
reply to the inspection report, reply to the SCN and at the time of personal hearing has
submitted that its DP collection centre are connected through back office with the main DP
centre.
33. I have perused the inspection report as well as the noticee's submission with regard to the
connectivity of collection centers of DP with its main office. The DP has not submitted any
proof in respect of its contention that all its collection centres were connected through back
office with its main DP office. However, since the inspection report does not mention the
list of branches acting as collection centers nor has any proof of receipt of documents by

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the DP from these locations been provided therein. Therefore there is no documentary
evidence to prove the violations alleged in the inspection report. Thus I find that the
allegation that branches acting as collection centres were not connected electronically and
alleged violation of Regulation 20(2) of DP Regulations read with CDSL communiqu no
CDSL/OPS/DP/252 dated March 07, 2003 cannot be held in this instance.
Delaying the dispatch of dematerialization requests to the RTI/STA
At the time of inspection the noticee's procedure of processing and dispatching the demat
requests to RTI/STA had been examined to ascertain whether the DP was sending the
requests to the concerned Issuer/RTA within stipulated time. However, a large number of
instances were found wherein DP failed to dispatch demat requests to the concerned
RTI/STA within the stipulated limit of 07 days. The noticee has submitted a detailed list
explaining the instances of delay brought out in the inspection report. I observe from the
noticee's response that in no case the number of days exceeded 07 working days. The CDSL
Operating Instruction no. 4.4.15 stipulates that, "security certificates must be forwarded to
the Issuer/RTA within 7 days from the date of receiving physical documents". I'm inclined to
give the benefit of doubt to the noticee in the interest of natural justice. Thus the alleged
violation cannot be held in this instance.
Not blocking lost requisition slips in the system
34. At the time of inspection the noticee's procedure of issuance of Delivery Instruction Slip
Booklet ("DIS booklet") was scrutinized and it was found that certain safeguards while
issuance of the same as stipulated by SEBI/CDSL were not being adhered to. For instance
while new Delivery Instruction Slip (DIS) was issued on the basis of letter mentioning loss of
requisition slip, however, lost instruction slips had not been blocked in the system.The
noticee has submitted that it was due to oversight of its staff that the DIS reported to be
lost were not blocked in the system. It has also submitted that these DIS have been
subsequently blocked in the system.
35. The noticee has not contested the violation brought out in the inspection report. On perusal
of the inspection report I observe that 4 such instances have been cited therein. While it is
not a very large number of instances of nonetheless the noticee has violated the
stipulations pertaining to lost DIS.I thus find that by not blocking lost DIS in the system the
noticee has violated Clause 4 of Code of Conduct for Participants specified under Regulation
20A of DP Regulationsread with SEBI circular no. SEBI/MRD/Dep/Cir-03/2007 dated
February 13, 2007.

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Executing delivery instructions without signature of beneficial owner on the requisition

slip
During the inspection it was observed that instructions had been executed without the
signature of the beneficial owner on the instruction slip. The inspection report had noted
that instructions had been executed without the signature of one beneficial owner
HamzaIqwal on the instruction slip. The DP had later obtained confirmation from the client
in respect of the instructions executed by him, however the execution was done on the
basis of an unsigned DIS. Thus the Noticee has violated Clause 4 of Code of Conduct for
Participants specified under Regulation 20A of DP Regulations read with SEBI circular no.
SEBI/MRD/Dep/Cir-03/2007 dated February 13, 2007
Not refunding credit balances to clients at the time of closure of account
36. The inspection report noted a large number of instances wherein beneficial owner account
was closed inspite of balance amount lying as credit in the closed beneficial owner account.
The noticee has submitted in reply to the SCN that the accounts mentioned in the
inspection report were closed before billing. Hence there was a credit balance lying in the
account after closure. At the time of the personal hearing it was submitted that the noticee
as practice refunds balance credit amount to client after next billing date due to adjustment
reason. They further submitted that most of the clients have given them authority to adjust
the credit balance of one account with the debit balance of another family account. The
provision alleged to have been violated by the noticee states that the account shall be
closed in the system when all the balances in the account are zero. I find that the CDSL
operating instruction is quite self explanatory hence the reply of the noticee in this regard is
unsatisfactory and not acceptable. Thus by failing to clear balances in the DP account of
client before closure the noticee has violated Clause 4 of Code of Conduct for Participants
specified under Regulation 20A of DP Regulations read with CDSL Bye Law 13.7 and CDSL
operating instruction no. 10.5.2 issued under Bye Law 4.2
37. In light of the above, following violations stands established:
a) noticee has violated Regulation 15A of the Broker Regulations as its Directors were
acting as its sub-broker
b) noticee has failed to maintain segregation between own funds & client funds and has
violated the provisions of Clause A(2) of Code of Conduct for Brokers laid down under
Schedule II specified under Regulation 7 of Broker Regulations read with SEBI Circular no
SMD/SED/CIR/93/23321 dated November 18, 1993.

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c) by granting terminals to its remisiersnoticee has violated Clause A(2) and A(5) of the
Code of Conduct for stock brokers laid down under Schedule II read with Regulation 7 of
Broker Regulations read with SEBI circular no. SMDRP/POLICY/CIR-49/2001 dated
October 22, 2001 and BSE Notice no. 20040205-13 dated February 5, 2004
d) by allowing persons that are not its employees/ on its payroll to operate its terminals
the noticee has violated Clause A(2) and A(5) of the Code of Conduct for stock brokers
laid down under Schedule II read with Regulation 7 of Broker Regulations read with BSE
Notice No. 56712/99 dated July 20, 2000.
e) by not displaying exclusive e-mail ID for redressal of investor grievances on its client
registration forms / contract notes/ website the noticee has violated Clause A(2) and
A(5) of the Code of Conduct for stock brokers laid down under Schedule II read with
Regulation 7 of Broker Regulations read with SEBI circular MRD/DoP/Dep/SE/Cir-22/06
dated December 18, 2006
f) by paying interest to clients on credit balances maintained with noticee it has violated
Rule 8(1)(f) and 8(3)(f) of Securities Contracts (Regulation) Rules, 1957
g) by not blocking lost DIS in the system the noticee has violated Clause 4 of Code of
Conduct for Participants specified under Regulation 20A of DP Regulations read with
SEBI circular no. SEBI/MRD/Dep/Cir-03/2007 dated February 13, 2007
h) by executing instructions based on unsigned DIS, the Noticee has violated Clause 4 of
Code of Conduct for Participants specified under Regulation 20A of DP Regulations read
with SEBI circular no. SEBI/MRD/Dep/Cir-03/2007 dated February 13, 2007
i) by failing to clear balances in the DP account of client before closure the noticee has
violated Clause 4 of Code of Conduct for Participants specified under Regulation 20A of
DP Regulations read with CDSL Bye Law 13.7 and CDSL operating instruction no. 10.5.2
issued under Bye Law 4.2
38. The Honble Supreme Court of India in the matter of SEBI Vs. Shri Ram Mutual Fund *2006+
68 SCL 216(SC) held that In our considered opinion, penalty is attracted as soon as the
contravention of the statutory obligation as contemplated by the Act and the Regulations is
established and hence the intention of the parties committing such violation becomes
wholly irrelevant. Hence, I am constrained to take a view in line of the Hon'ble Supreme
Court ruling.
39. In view of the foregoing, I am convinced that it is a fit case to impose monetary penalty
under following provisions:
a) Section 15 HB of the SEBI Act which reads as follows:

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15HB.Penalty for contravention where no separate penalty has been provided.Whoever fails to comply with any provision of this Act, the rules or the regulations made
or directions issued by the Board thereunder for which no separate penalty has been
provided, shall be liable to a penalty which may extend to one crore rupees.
b) Section 19G of Depositories Act, 1996 which reads as follows:
19G. Penalty for contravention where no separate penalty has been provided.
Whoever fails to comply with any provision of this Act, the rules or the regulations or
bye-laws made or directions issued by the Board thereunder for which no separate
penalty has been provided, shall be liable to a penalty which shall not be less than one
lakh rupees but which may extend to one crore rupees.
c) Section 23H of Securities Contracts (Regulation) Act, 1956which reads as follows:
23H. Penalty for contravention where no separate penalty has been provided.
Whoever fails to comply with any provision of this Act, the rules or articles or bye- laws
or the regulations of the recognised stock exchange or directions issued by the Securities
and Exchange Board of India for which no separate penalty has been provided, shall be
liable to a penalty which shall not be less than one lakh rupees but which may extend to
one crore rupees.

40. While determining the quantum of monetary penalty under Section 15 HB of the SEBI Act,
Section 19G of Depositories Act, 1996 and Section 23H of Securities Contracts (Regulation)
Act, 1956 , I have considered the factors stipulated in Section 15J of SEBI Act,Section 19I of
Depositories Act, 1996 and Section 23J of Securities Contracts (Regulation) Act, 1956
respectively which reads as under:15J - Factors to be taken into account by the adjudicating officer
While adjudging quantum of penalty under Section 15-I, the adjudicating officer shall have
due regard to the following factors, namely:(a) the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as
a result of the default;
(b) the amount of loss caused to an investor or group of investors as a result of the default;
(c) the repetitive nature of the default.
19-I. Factors to be taken into account by adjudicating officer
(a) the amount of disproportionate gain or unfair advantage, wherever quantifiable, made
as a result of the default;
(b) the amount of loss caused to an investor or group of investors as a result of the default;
(c) the repetitive nature of the default.
23J Factors to be taken into account by adjudicating officer..

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(a) the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as
a result of the default;
(b) the amount of loss caused to an investor or group of investors as a result of the default;
(c) the repetitive nature of the default
41. In the instant case, it is noted that no quantifiable figures are available to assess the
disproportionate gain or unfair advantage made as a result of such default by the Noticee.
Further from the material available on record, it may not be possible to ascertain the exact
monetary loss to the investors on account of default by the Noticee. I find from the records
before me that the default of the Noticee is not repetitive in nature.
ORDER
42. After taking into consideration all the facts and circumstances of the case, I impose a
penalty of Rs2,00,000/- (Rupees Two Lakhs only) under section 15 HB of the SEBI Act, Rs
1,00,000/- (Rupees one Lakh only) under Section 19G of Depositories Act, 1996 and Rs
2,00,000/- (Rupees Two Lakhs only) underSection 23H of Securities Contracts (Regulation)
Act, 1956 on the Noticee. Therefore a total penalty of Rs 5,00,000/- (Rupees Five Lakhs
only) is imposed upon the noticee. I am of the view that the said penalty would be
commensurate with the violations committed by the noticee.
43. The Noticee shall pay the said amount of penalty by way of demand draft in favour of SEBI
- Penalties Remittable to Government of India, payable at Mumbai, within 45 days of
receipt of this order. The said demand draft should be forwarded to Regional Director, SEBI
- NRO, 5th Floor, Bank of Baroda Building, 16 SansadMarg, NewDelhi - 110001.
44. In terms of rule 6 of the Rules, copies of this order are sent to the Noticee and also to the
Securities and Exchange Board of India.

Date:May 1, 2015
Place: New Delhi

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NARENDRA RAWAT
ADJUDICATING OFFICER