Due skill and diligence not breached where broker merely executed client trades without evidence of collusion or self-dealing.

A stock broker was found not to have violated the code of conduct for failure to exercise due skill, care and diligence because it had complied with KYC requirements, acted only on client instructions, and did not trade on its own account in the scrip. The record showed market activity and corporate announcements during the relevant period, while the connected clients also traded in other scrips through the broker. In the absence of substantial evidence of prior understanding, collusion, or any link beyond the ordinary broker-client relationship, mere execution of trades for connected clients was insufficient to establish misconduct. No monetary penalty was warranted.

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Issues: Whether the stock broker failed to exercise due skill, care and diligence while executing trades for connected clients and thereby violated the code of conduct under the stock broker regulations, and whether monetary penalty was attracted under the SEBI Act.

Analysis: The broker had complied with KYC requirements, acted only on behalf of clients, and had not traded on its own account in the scrip. The record showed corporate announcements and market activity in the relevant period, and the connected clients were also trading in other scrips through the broker. There was no material showing prior understanding, collusion, or any connection between the broker and the issuer or the connected clients beyond the ordinary client-broker relationship. In the absence of substantial evidence, mere execution of trades for connected clients was held insufficient to establish failure of due skill, care and diligence.

Conclusion: The alleged violation was not established and no monetary penalty was warranted.

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