Regulation 13 - Imposition of penalty - SECURITIES AND EXCHANGE BOARD OF INDIA (PROCEDURE FOR HOLDING ENQUIRY BY ENQUIRY OFFICER AND IMPOSING PENALTY) REGULATIONS, 2002

Imposition of penalty 13. (1) The enquiry officer shall, after considering the written statement and the oral submissions, if any, of the intermediary and the provisions of the relevant Regulations, submit a report to the Chairman or a member designated in this behalf and recommend for the imposition of any of the following penalties by the Chairman or the member, as the case may be, with the justification for the imposition thereof:- (a) Minor penalties - i) 1 [ ***] or censure; ii) prohibiting the intermediary to take up any new assignment or mandate or launch a new scheme for a period upto six months; iii) debarring a partner or a whole time director of the intermediary from carrying out the activities as intermediary in the intermediary firm or company and other capital market related institutions for a period upto six months ; iv) suspension of certificate of registration for a period upto three months; v) debarring a branch or an office of the intermediary from carrying out the activities for a period upto six months. (b) Major penalties - i) cancellation of certificate of registration; ii) suspension of certificate of registration for period exceeding three months; iii) taking of action under sub-clause (ii), (iii) or (v) of clause (a) for a period exceeding six months. (2) On receipt of the report from the enquiry officer, the Chairman or the member, as the case may be, shall consider the same and issue a show-cause notice to the intermediary 2 [ enclosing therewith a copy of the report of the Enquiry Officer ] as to why the action as it considers appropriate should not be taken. (3) The intermediary 3 [ may] within fifteen days of the date of the receipt of the show-cause notice send a reply to the Chairman or the member, as the case may be. 4 [ (4) The Chairman or the member, as the case may be, after considering the reply to the show-cause notice, if received, shall as soon as possible and endeavour shall be made by him to pass such order within one hundred and twenty days from the date of receipt of reply of the intermediary] 5 [Explanation For the purposes of this sub regulation, the date of receipt of reply of the intermediary includes the date on which the intermediary makes oral submissions in a hearing before the Chairman or Member, if granted by him.] pass such order as it deems fit. (5) 6 [***] (6) The Board or the member shall impose major penalties only in the following circumstances, namely:- (a) the intermediary or any of its whole-time directors or partners or its proprietor has been found guilty of price or market manipulation of any scrip or index or assisting in such manipulation or of insider trading; (b) the intermediary is guilty of violation of conditions of registration; (c) the intermediary or any of its whole time directors or partners or its proprietor is found to be not a fit or proper person; (d) failure to obey directions of the Board passed under section 11 or section 11B of the Act or failure to obey order of an adjudicating officer imposing monetary penalty passed under section 15I of the Act by the intermediary; or (e) repeated defaults by the intermediary for which action can be taken against him under clause (a) of sub-regulation (1). (7) Every order passed under sub-regulation (4) shall be dated and signed by the Chairman or the member, as the case may be. *************** 1 Words warning or omitted by SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) (Amendment) Regulations, 2004, w.e.f. 31.12.2004. * 2. Inserted by the SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Second Amendment) Regulations, 2005, w.e.f. 7.6.2005. *[As corrected vide SO 1333(E), dated 21.08.2006. 3. Substituted for shall, ibid. 4. Substituted, ibid. Prior to its substitution, sub-regulation(4), read as under: (4) The Chairman or the member, as the case may be, after considering the reply to show-cause notice, if received, shall as soon as possible pass such order as it deems fit. 5. Inserted, ibid. *[As corrected vide SO 1333(E), dated 21-8-2006. 6. Omitted by the SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) (Second Amendment) Regulations, 2005, w.e.f. 7-6-2005*. Prior to its omission, sub-regulation (1) has recommended or imposing of a minor penalty and the Chairman or the member, as the case may be, proposes imposing of a major penalty, he shall give a notice to the intermediary to make written submission against the proposed action within fifteen days after the receipt of the notice and the Chairman or the member after taking into consideration the written submissions, if any, shall pass such orders as deemed appropriate. *[As corrected vide SO 1333(E), dated 21.08.2006.