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TMI Blog2015 (10) TMI 1717X X X X Extracts X X X X X X X X Extracts X X X X ..... with Clause A(2) of the Code of Conduct as prescribed under Schedule II, Regulation 15 of Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) Regulations, 1992 (for short "Stock Brokers and Sub-Brokers Regulations, 1992"). 2. Briefly stated the facts of the case are that the Appellant namely, Master Share & Stock Brokers Ltd., is a sub-broker registered with SEBI. Appellant is a sub-broker of M/s. LSE Securities Ltd. which happens to be a subsidiary of Ludhiana Stock Exchange Ltd. SEBI conducted an investigation on 7th/8th August, 2012 of various book of accounts, records and other documents maintained as furnished by the Appellant in respect of its affairs. It was found that the Appellant had not taken due care and ski ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es at length and perused the pleadings and provisions of law in detail. Para 2 of the said Circular makes it abundantly clear that the trading terminals granted to the stockbrokers cannot be misutilized for unregistered sub-broking activities. The trading terminals are only to be granted at the members' registered office, branch office or its registered sub-brokers' offices. Therefore, terminals granted at other locations than the prescribed ones in the circular would be totally illegal. The underlying idea seems to be to have proper control over the terminals for regulation purposes and it should be within the knowledge of the Stock Exchange as well as SEBI that the terminals are being run at the office of the broker or its branch office o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k Brokers and Sub- Brokers Regulations, 1992. Shri Kumar Desai, learned counsel for the Respondent also brought to our notice Circular No.163 dated 20th April, 2000 issued by the National Stock Exchange Limited to all the members. Para 2 of the said circular categorically provides that the trading terminals shall be required to be under the direct control of the trading member and be managed either by an authorized employee or by a registered sub-broker of the trading member. In the present case, admittedly, the 4 terminals at 3 locations in dispute were managed by a consultants/persons engaged on contract basis and not by authorized employee or by the sub-broker himself. 7. Turning to the point urged by Shri Prakash Shah that the penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12, 2012 was Rs. 13,35,276 on buy side and Rs. 13,14,855 on sell side; and from BSE terminal MSB06 from January 4, 2011 to August 9, 2012 was Rs. 19,65,494 on buy side and Rs. 12,76,972 on sell side. I note that all the 4 terminals at 3 locations were being operated by persons who were not employees of the Noticee, but, were the clients of the Noticee." 8. To sum up, the Appellant has knowingly allowed the ultimate clients to operate the terminals which were meant for the sub-broker himself or for his authorized employees. There is no convincing reason for doing so. This practice is against the SEBI Circular dated 22nd October, 2001 in question as well as the norms prescribed by Stock Brokers and Sub-Brokers Regulations, 1992 in this rega ..... X X X X Extracts X X X X X X X X Extracts X X X X
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