TaxTMI 
TaxTMI 
2012 (7) TMI 1054
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....ns 4(b) and (d) of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995 (FUTP Regulations) and clauses A(2) and (3) of the Code of Conduct prescribed for the stock brokers in Schedule II under Regulation 7 of the Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) Regulations, 1992 (stock brokers regulations). 2. The facts of the case, in brief, are that, the appellant is a stock broker registered with the Securities and Exchange Board of India and is carrying on activities of stock broking since 1999. In and around June, 2001, the Board conducted investigation into the dealings in the scrip of Mascon Global Limited (for short t....
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....ld not be suspended or cancelled and why any other action as provided under the said regulations may not be taken. The appellant replied to the show-cause notice vide its letter dated October 20, 2008, denying the allegations. An enquiry was held against the appellant and the designated authority, by its report dated July 21, 2009, recommended that certificate of registration of the appellant be suspended for a period of two weeks. A copy of the report was made available to the appellant vide letter dated August 31, 2009. The appellant again denied the charges by its letter dated April 19, 2011. After considering the reply submitted by the appellant, the whole time member of the Board, by his order dated March 2, 2012, observed that inferen....
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....e appellant or his clients with Ketan Parekh and the entities related to him. It has been specifically observed by him that the inference about the nexus is not supported by any proof and in the absence of the same, it is difficult to conclude that the noticee was aware of the counter party clients/brokers for the trades of its clients. The only other charge, which according to the whole time member stands proved, is that the trades of the appellant were being matched in a synchronized manner and that it had executed cross trades. The explanation offered by the appellant that the reason for execution of cross trades was that it knew both the parties has not been accepted by the whole time member observing as under:- "I note that the scri....
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.... that the provisions of the FUTP Regulations will get attracted. All these trades were executed on behalf of the clients and no action is said to have been taken by the Board against these clients. In view of the foregoing discussions, we are of the view that in the facts and circumstances of this case, the charge of violating the provisions of regulations 4(b) and (d) of the FUTP Regulations is not made out. 4. The appellant has also been found guilty of violating clauses A(2) and (3) of the Code of Conduct prescribed for the Stock Brokers in Schedule II under regulation 7 of the Stock Broker Regulations. While arriving at this finding, the whole time member in para 11 of his order has observed as under:- "11. I note that the broker is....
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....hat the charge of violating FUTP Regulations is not made out, the charge of violating clause A(3) of the code of conduct also fails. Due care and diligence as contemplated in the regulations governing code of conduct of brokers can be due care and diligence as expected of a prudent broker operating in the normal circumstances of the market. The whole time member has not brought out any instance of due skill and care which has not been followed by the appellant in the conduct of his business. If the transactions were entered into at the prevalent market price and the transactions resulted in the delivery of shares and there is no allegation of price manipulation, how can such a transaction be said to have been executed or entered into withou....