TaxTMI 
TaxTMI 
2018 (5) TMI 2151
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....) As a stock broker in equity derivative segment of BSE (Registration number: INF011467330). f) As a stock broker in Currency Derivative Segment of BSE (Registration number: INB011467330). i) As a Depository Participant of Central Depository Services Ltd. (CDSL) (Registration number: IN-DP-CDSL-699-2013). 2. F6 Commodities Pvt. Ltd.("FCPL") having its registered office at Unit no. 206, 2nd Floor, Sewa Corporate Park, M. G. Road, Gurgaon -122002 is registered with SEBI as a commodity derivatives broker of Multi Commodity Exchange of India Ltd (MCX), National Multi Commodity Exchange Ltd. (NMCE) and National Commodity & erivatives Exchange Limited (NCDEX) (Unique Registration number: INZ000037335). 3. The summary of directorship of F6 and FCPL and the respective tenure of the directors is as under: S. No Entity Name Tenure of the Directors A F6 Finserve Private Limited 1 Present Directors a. Pankaj Goel 27/01/2005-till date 2 Past Directors a. Meenu Goel 24/12/2013-01/01/2018 b Sanjay Anand 10/02/2015-01/01/2018 c Kavita Anand 10/02/2015-01/01....
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.... and Canara Bank. The total value of shares pledged as on 26-Oct-2015 was Rs. 22,53,40,378 . The broker had pledged shares of 532 clients as on the said date and on 438 instances the overdraft amount was in excess of the obligation of the relevant clients. d. Actual settlement of client fund and securities not done • It was observed that F6 had not done settlement for 121 clients as on Sep 30, 2016 having credit balances of funds and securities which were inactive for more than 3 months. e. False reporting of Margin collected from clients in CD and F&O segments • From the records produced and other submissions made by the broker, it was observed that the broker has incorrectly reported margin collected from clients trading in Future & Option segment on 1 instance. 7. In view of the observations made by NSE during inspection of F6 (communicated to SEBI vide email dated July 27, 2017) and considering the gravity of the violations observed, SEBI also conducted inspection of F6 between August 10-30, 2017 for the period April 01, 2015 to August 10, 2017 ("the inspection period"). 8. Thereafter, in view of the gravity of the observations ....
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....unts of certain clients namely Distinct Softwares Pvt. Ltd., Jagmohan Garg, Sonia Finvest Pvt Ltd., Manoj Amrutlal Chauhan, Pradeep Agarwal, Arun Kumar Bajpai, Arush Tiwari, Binod Kumar Kushawaha, Mainak Deb, Rajesh Tiwari and Ravindra Nath Tiwari, who actually did not possess those securities as on the date of the respective sale. d. Actual settlement of client funds and securities not done • It was observed that F6 had not settled funds and securities aggregating to Rs. 16.74 crores of 791 clients who had not traded since last 3 months (since October 1, 2017) as on January 22, 2018. 9. The main observations of the above mentioned inspection carried out by SEBI during August 10-30, 2017 (as mentioned above) are, inter alia, as under i) Non-settlement of funds of inactive clients • It was observed that F6 has not settled funds aggregating to Rs. 1.43 cr. of 891 clients who have not traded during last 3 months (since Jan 01, 2017-Mar 31, 2017). ii) Improper use/Mis-utilisation of client funds • It was observed that on sample 33 instances verified during the inspection, funds received from the clients aggregating to....
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.... 13,96,47,386 7,60,27,999 54.44% 12/09/2016 12,33,924 5,87,21,107 5,99,55,031 10,76,27,801 4,76,72,770 44.29% 07/08/2017 3,65,65,338 9,33,25,123 12,98,90,461 20,16,08,272 7,17,17,811 35.57% 05/04/2017 1,51,34,043 9,28,56,107 10,79,90,150 12,87,80,735 2,07,90,584 16.14% • In view of the above, it appears that the funds of the clients, having credit balance with the Broker, were utilized for allowing exposure to the clients having debit balance or were used by F6 for its own purposes. The difference between the credit balance in the clients' ledger as submitted by F6 and the sum of balances lying in the Client Bank accounts and the cash collateral lying with exchanges as on the sample dates (random selection) is tabulated below: (Figures in Rs.) Date Client fund misused (G) (Absolute value of G in the table above) Debit balance client Funds Misused for Debit Balance of Clients / own purpose 03/06/2015 5,01,96,928 20,77,53,541 5,01,96,928 16/06/2015 4,78,17,571 19,74,76,616 4,78,17,571 30/09/2015 5,60,97,905 16,33,80,029 5,60,97,905 20/0....
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....oker had failed to exercise due diligence which led to mis-utilization of client securities. SCRIP Date of Sale Balance available in Demat Ledger before sale Sold Qty Shares sold in excess of availability SBI Bank 03-06-15 0 8750 8750 ICICI Bank 03-06-15 0 10,000 10,000 HDFC Bank 03-06-15 0 4,000 4,000 Nectar Lifesciences 16-06-15 0 1,142 1,142 Raj TV 16-06-15 0 18,117 18,117 Unitech Ltd. 05-04-17 10,205 1,27,042 1,16,837 ITC 14-09-16 2 3 1 Bliss GVS Pharma Ltd 12-09-16 0 1285 0 Trade Date Scrip Qty traded in Pro A/c Shares credited in Pool A/c (1207770000000016) Remarks 08/09/2016 Meghmani Organics 3,483 3,483 3,483 shares transferred to pool a/c from Margin Beneficiary (Ben.) Account. Shares received in Margin Ben A/c from Client Ben A/c (IN30009511647782) 09/09/2016 Reliance Naval(INE 542F01012) 4,850 4,900 4,900 shares settled. Shares received in pool a/c from Margin Ben A/ c. Shares received in Margin Ben A/c from Client Beneficiary A/c (IN30009511647782) 09/09/2016 E-Land Apparel 200 ....
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....-ups and reminder mails/ letters to F6, it did not submit any reply. In view of the same, F6 was called for a meeting at NSE's office on Sep 20, 2017 to discuss status of observations. Based on the meeting held on September 20, 2017, F6 sent the undertaking on Nov 01, 2017 to NSE wherein it stated that for any shortfall of funds and securities for any client, the director Pankaj Goel shall be responsible and the said shortfall shall be made good from his resources. In this regard, NSE's Internal Committee for Minor Actions (ICMA) in its meeting held on December 05, 2017 decided that the matter should be referred to Disciplinary Action Committee (DAC). 11. On January 22, 2018, NSE received 2 complaints amounting to Rs. 2.33 cr regarding non receipt of funds from F6. As noted above, an inspection of the trading member was also initiated on Jan 23, 2018 by NSE. Considering the significant unavailability of client funds and securities, which may have serious repercussion on safety of clients' assets, the matter was again placed before ICMA. ICMA in its meeting held on February 01, 2018 decided to prohibit the new client registration of F6 till further notice. 12. The DAC of NSE v....
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....ents/ transferred to Business A/c of F6 or were paid to Pankaj Goel, Director of F6. • Use of securities of certain clients used for meeting the obligation of another client (KK Advisors Private Limited). • The securities of client have been mis-utilized by the broker for settlement of PRO/Own obligation. • The broker has received securities from third party (not a client of the broker) in its client a/c indicating that the client beneficiary a/c has been used for purposes other than the specified purpose. • The broker has not maintained inter-se client segregation of securities. c. The funds of credit balance clients have been mis-utilized by F6 to fund debit balance clients/for own purposes. Hence, prima facie F6 has not complied with SEBI Circular SMD/SED/CIR/93/23321 dated November 18, 1993 and SEBI Circular MRD/DoP/SE/Cir- 11/2008 dated April 17, 2008. d. The broker has raised funds by pledging securities of clients in violation of SEBI Circulars no. MRD/DoP/SE/Cir-11/2008 dated April 17, 2008 and SMD/SED/CIR/93/23321 dated November 18, 1993. e. By making wrong reporting about margin collection, F6 ....
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....ent to their expulsion and declaration of defaulter by BSE and NSE. 17.As informed by MCX, F6 was not registered as a client of FCPL. Also, as informed by BSE, FCPL was not registered with F6 as a client on BSE. Though, FCPL was a client of F6 on NSE, but as informed by NSE, FCPL did not execute any trade through the broker F6 during the period April 01, 2016-Mar 31, 2018. Despite this, there were unreasonably huge fund transfers between F6 and FCPL during the inspection period. 18.Also, similar to F6, investor complaints have been filed against FCPL. It is noted that as on May 7, 2018, there were 61 investor complaints pending against FCPL which total up to a claim value of Rs. 35.95 lakh. 19.It is noted that Mr. Pankaj Goel is the present director of F6. Ms. Meenu Goel, Mr. Sanjay Anand, Ms. Kavita Anand, Ms. Asha Sharma, Mr. Deepak Goel and Ms. Ruchika Goel ceased to be Directors of F6 with effect from January 01, 2018. Mr. Parveen Sharma ceased to be a director of F6 with effect from January 02, 2018. However, all of them were acting as a directors of F6 when the violations observed above were going on. As regards FCPL, Mr. Pankaj Goel and Ms. Meenu Goel are presently ....
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....s is a case where effective and expeditious action is required to be taken to prevent any further harm to investors. 24.Pending detailed inquiry, in view of the liabilities of F6 and FCPL and transfer of clients' funds / securities between F6 and FCPL it is essential to take urgent steps to prevent F6, FCPL and its present / past directors not to alienate any assets, whether movable or immovable, or any interest or investment or charge in any of such assets, so that the final remedies, if any, do not become infructuous. 25.Further, in order to maintain the status quo, pending detailed inquiry, I also find it appropriate that the holdings of the bank accounts of F6 and FCPL are also required to be frozen. 26.It is noted that Mr. Pankaj Goel and his wife, Ms. Meenu Goel are the promoters of F6 and FCPL. Mr. Pankaj Goel has been the director of F6 since 27/01/2005 till date and Ms. Meenu Goel was the director of F6 from 24/12/2013 to 01/01/2018. Both of them have also been the directors of FCPL since 26/12/2012 till date. Further, they were also the Designated Directors of F6 during the relevant period and were also managing the day to day affairs of F6 including overseeing r....
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....I. e. Till further directions in this regard, the assets of these entities shall be utilized only for the purpose of payment of money and/or delivery of securities, as the case may be, to the clients/investors under the supervision of the concerned stock exchange(s). f. The depositories are directed to ensure that no debits are made in the demat accounts, held jointly or severally, of the aforesaid entities and persons except for the purpose mentioned in sub-para (e) after confirmation from the concerned stock exchange in this regard. g. Registrar and transfer Agents are also directed to ensure that the securities (including mutual fund units) in physical form, held jointly or severally, by the aforesaid entities and persons are not transferred/redeemed except for the purpose mentioned in sub-para (e) after confirmation from the concerned stock exchange in this regard. h. The banks are directed to ensure that no debits are made in the bank accounts held jointly or severally by F6 Finserve Private Limited, F6 Commodities Private Limited, Mr. Pankaj Goel, and Mr. Meenu Goel, except for the purpose of payment of money to the clients/investors under ....