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Sebi suspends Reliance broking co for 4 months -
December 12th, 2006
Sebi suspends Reliance broking co for 4 months
MUMBAI: The Securities and Exchange Board of India (Sebi) has suspended Reliance Shares and Stock Broking (RSSB) — part of the Reliance-Anil Dhirubhai Ambani Group (R-ADAG) for four months for series of lapses in its broking operations that took place more than six years ago.
An R-ADAG spokesperson said the move would not affect the retail stock broking plans of the group to be launched under the Reliance Money brandname as the stock broking licences are held in another set of companies. The inspecting authority conducted an inspection of the stock broker for the period commencing from April 3, 1999 to November 26, 2000 with reference to its transactions on BSE.
“The Sebi order relates to alleged procedural defects in the period 1999-2000, more than 6 years old, when RSSB was part of the combined old Reliance group. RSSB will be filing an appeal before the Securities Appellate Tribunal (SAT), challenging the order, and seeking a stay thereof. RSSB now has an insignificant volume of business transactions, and there are no plans to expand the same,” an RSSB spokesperson said.
In the inspection, books of accounts, documents and other records of the stock broker were examined by Sebi. The violations were with regard to non-maintenance of requisite books of accounts, documents and other records, non issuance of contract notes, undertaking of improper trades and transactions with other members of BSE, non-segregation of own funds from client’s funds and utilisation of client’s funds, non-maintenance of client database and dealing with unregistered sub-brokers.
“I find that the number of such instances of payment and withdrawal itself establishes that these had not happened by mistake or by accident as claimed by stock broker, rather these were transactions done by the stock broker in gross disregard to the applicable laws for its own conveniences,” the order said. Reprimanding the brokerage, Sebi accused it of not rectifying the irregularities even after 3 years from the date of inspection by Inspecting Authority.
“Even after taking note that Sebi has levelled these serious charges against the stock broker, it is surprising to see that the broker continued with the very same irregularities till March 2004 and until it was pointed out again by the BSE’s inspection. However, considering that there are a few violations which are technical in nature where some of them have been since rectified, I am inclined to reduce the penalty from nine months to four months,” TC Nair explained in his report.
Sebi in October 2000, had appointed auditors Devendra Kumar & Associates to conduct inspection of books of accounts, documents and other records of the stock broker. This order shall come into force on the expiry of 21 days from Monday, Sebi said.
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