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Judgment
Tarun Agarwala, Presiding Officer
The present appeal has been filed against the order of the Adjudicating Officer (“AO†for convenience) of the Securities and Exchange Board
of India (“SEBI†for convenience) dated April 25, 2019 imposing a penalty of Rs. 5 lakhs.
The facts leading to the filing of the appeal is pursuant to an inspection a show cause notice was issued to show cause as to why penalty should not
be imposed for violating the provisions of Circular Dated December 03, 2019 issued by SEBI and for violating of the Code of Conduct for Sub-brokers
as specified in the Brokers Regulations.
The AO after considering the reply of the respondent and after giving an opportunity of hearing found that the non-compliance continues even after
the inspection and consequently imposed a penalty of Rs. 5 lakhs.
Having heard the learned counsel for the appellant, we find that the settlement of the funds/ securities of the client were required to be made within
24 hours of the payout which has not happened and for which there is no valid explanation. Further credit balances of more than Rs. 10,000/-
remained outstanding for more than 90 days which was also in violation of the Circular and the Brokers Regulations. We find that by not settling the
account of clients, the appellant was not only using the idle clients fund but also exposing the accounts of the clients to misuse. We also find that the
inspection made by SEBI was for the year 2015-2016, 2016-2017. Inspite of knowing the irregularities committed by the appellant the same
irregularities continued which was found by the National Stock Exchange of India Limited (NSE) when they made the inspection for the period
January 2017 to January 2018.
In view of the aforesaid, we do not find any manifest error in the order of the AO. The Appeal fails and is dismissed.