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2019 (11) TMI 846 - AT - SEBISuspension of registration of a broker with the National Stock Exchange of India Limited (‘NSE’ for short), for a period of one year by Whole Time Member (‘WTM’) of SEBI - HELD THAT:- Safekeeping all the documents and material relating to a broker’s functions is a basic responsibility. Conflicting replies relating to the role of BGSPL and Shri Puneet Agarwal as well as relating to other similar clients owned premises based branch operations therefore do not absolve the appellant fully from the violations upheld in the impugned order. It is held in the impugned order that the appellant violated various provisions of law, regulations and circulars issued thereunder. These include SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992, PFUTP Regulations, Securities Contract (Regulations) Act, 1956 and the Securities Contract (Regulations) Rules, 1957 and various circulars issued by SEBI. Some of the violations though may be technical and procedural in nature. We also do not agree with the contentions of the appellant that client codes given in the contract notes are just reference codes in the absence of SEBI identifying those clients. When BGSPL was only one client and its unique client code was used there was no requirement for using other reference codes. Therefore, we do not find any fault in the finding in the impugned order that the appellant was using the services of unregistered sub brokers or some of its clients were actually discharging functions of sub brokers without SEBI registration. Whether BGSPL or some other such entities got the registration for sub broker-ship later is not germane to the matter because what is relevant is whether they were certified sub brokers at the relevant time. Therefore, given these major violations we do not find any fault in penalizing the appellant with an order of suspension. Time frame is very important while judging gravity of offences across time and in doing justice. We also agree with the submissions of the appellant that a long period of suspension of a market intermediary like a broker would make them completely defunct which, in the given context would make the punishment disproportionate. At the same time we do not agree with the submission that a warning would suffice since utilizing unauthorized sub-broker type dealing by a broker is a serious offence irrespective of the vintage of the offence. Balancing all these factors and circumstances into account we are of the view that a complete suspension of the appellant for a period of one year may not do full justice. Therefore, we modify the order of one year suspension of the appellant to that of one year restriction from taking any fresh clients. Therefore, the appellant shall not admit or take business from any new clients for a period of one year from the date of this order.
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