TaxTMI 
TaxTMI 
2018 (5) TMI 2151
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....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 10/02/2015-01/01/2018 d Asha Sharma 11/04/2016-01/01/2018 e Deepak Goel 27/01/2005-01/01/2018 f Ruchika Goel 24/10/2016-01/01/2018 g.  ....
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....ved 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 made during the inspection conducted in January, 2017 and complaints received against the broker; NSE conducted another inspection of F6 during January, 2018. Vide email dated February 05, 2018, NSE forwarded the observations made in its inspection of F6 to SEBI. In the said inspection also, NSE made several adverse observations against the broker which are inter alia a....
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....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 Rs. 17.03 cr. were transferred to the Business Account of F6 (Kotak Bank -7511370042) which is an overdraft account. Prima facie, it appears that the funds from clients were transferred to the abovementioned overdraft Bank account to reduce the burden of interest on the said overdraft exposure. Further, on certain instances the funds received from the clients were paid to other clients/ transferred to Business A/c of F6 or paid to Pankaj Goel (Director of F6). * During the inspection period (Ap....
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....ollateral 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 20/05/2015 6,64,80,513 19,57,24,081 6,64,80,513 04/05/2015 5,58,83,602 19,61,39,372 5,58,83,602 08/09/2016 4,47,81,677 18,05,72,558 4,47,81,677 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 22/06/2016 5,22,87,996 12,30,60,790 5,22,87,996 09/09/2016 4,93,55,511 18,12,10,362 4,93,55,511 28/06/2016 7,60,27,999 11,86,77,248 7,60,27,999 12/09/2016 4,76,72,770 18,23,66,319 4,76,72,770 07/08/2017 7,17,17,811 19,09,79,568 7,17,17,811 05/04/2017 2,07,90,584 19,72,70,584 2,07,90,584 iii) Non-segregation and mis-utilization of client securities * The broker had not maintained segregation between own and clients' securities....
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.... 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 200 500 500 shares settled. Shares received in pool a/c from Margin Ben A/ c. Shares received in MarginBen A/c from Client Beneficiary A/c (IN30009511647782) iv) Use of client beneficiary accounts for purposes other than specified * Upon perusal of the demat account statement of client A/c of F6, it was observed that F6 has received 31 lac quantity of Scrip MEP Infrastructure Developers Limited in its client beneficiary account no. (1207770000000073) during September, 2016 from Mr. Mhaiskar Dattatray Pandurang who is not a registered client of F6. v) Loan against Securities * It was observed during inspection that the broker pledged client securities with IL&FS, ICICI Bank, Edelweiss and Canara Bank to avail overdraft facility. From the data submitted by F6, it was observed that as on 05.10.2017, F6 had pledged securities of 1,116 clients. However, despite several reminders, F6 failed to submit complete information to SEBI in that regard. vi) Wrong reporting of Margin Collection ....
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....ided to prohibit the new client registration of F6 till further notice. 12. The DAC of NSE vide its Circular Resolution dated April 13, 2018 decided that F6 be declared a defaulter and be expelled from all segments. Accordingly, F6 was expelled and declared as defaulter w.e.f. April 13, 2018 vide Exchange circular dated April 13, 2018. BSE also declared F6 as a defaulter and expelled it w.e.f. April 3, 2018 from all segments. 13.Further, the data extracted by NSE from the records of F6 were also analysed and the following was observed:- i) The assets/ liabilities status of the broker as on January 22, 2018 on the basis of information obtained from its trial balance, demat account and Bank statements is as follows: (Rs. in Crores) Assets Amount Liabilities Amount Securities Holding Value 32.16 Client Credit Balance 19.58 Deposits available with Clearing Corporation/Exchange(as per trial balance) 14.64 Client securities as per RoS 51.57 Fund Balance in Bank Accounts 0.07 Total 46.87 Total 71.15 Shortage of funds 24.28 ii) Further, the broker has also availed Loan against Securities/Overdraft facility from Canara Bank, ICICI ....
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....BI Master Circular No. CIR/DNPD/1/2012 dated January 02, 2012 regarding short collection/non collection of client margins in derivatives segment. It also appears that F6 has not fully complied with the provisions of NSE Circular No. NSE/INSP/19583 dated December 14, 2011. f. By failing to cooperate with the inspecting authority and failing to provide complete information to the inspecting authority, F6 prima facie violated provisions of regulation 21 of SEBI (Stock Brokers and Sub Brokers) Regulations, 1992. g. F6 has also failed to comply with Clauses A (2) and A (5) of the Code of Conduct read with Regulation 9 (f) of the SEBI (Stock Brokers and Sub-brokers) Regulations, 1992. 15.It was also observed during the examination that F6 and FCPL are prima facie connected to each other on account of the following factors: a. They have the same registered office as per the MCA records. b. As noted from the MCA website, Mr. Pankaj Goel is the present director of both F6 and FCPL. Meenu Goel is a present director of FCPL and was a director of F6 from December 24, 2013- January 01, 2018 c. Mr. Pankaj Goel and Ms. Meenu Goel are the promoters of F6 and FCPL and together hold ....
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....is noted that it was terminated by CDSL on March 31 2018 and was converted into CDSL managed DP. 21.Any Company though a legal entity cannot act by itself, it can act only through its Directors. They are expected to exercise their power on behalf of the company with utmost care, skill and diligence. In terms of section 179 of the Companies Act, 2013, the Board of Directors of a company shall be entitled to exercise all such powers and do all such acts and things as the company is authorized to exercise and do. Therefore, the Board of Directors being responsible for the conduct of the business of a company are liable for any non-compliance of law and such liability shall be upon the individual directors also. Hon'ble Supreme court while describing what is the duty of a Director of a company held in Official Liquidator v. P.A. Tendolkar (1973) 1 SCC 602 that "A Director may be shown to be so placed and to have been so closely and so long associated personally with the management of the Company that he will be deemed to be not merely cognizant of but liable for fraud in the conduct of the business of a Company even though no specific act of dishonesty is proved against him personally....
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.... 01, 2016- March 31, 2018, F6 transferred Rs. 16.78 cr. (net) to Mr. Pankaj Goel and Rs. 16.25 Lacs (net) to Meenu Goel. Their association with F6 and FCPL and their position therein prima facie shows that they had an active role in the acts and omissions of F6 discussed hereinabove. In view of the prima facie non-compliances, movement of funds, misconduct and failure to repay the investors, pending detailed inquiry, it is also appropriate that the holdings of the bank accounts of Mr. Pankaj Goel and Ms. Meenu Goel are also frozen in order to maintain the status quo. 27.In view of the above, I, in exercise of powers conferred upon me by virtue of section 19 read with sections 11(1), 11(4), 11B and 11D of the SEBI Act, 1992, Regulation 35 of Securities And Exchange Board of India (Intermediaries) Regulations, 2008, by way of this ex parte - ad- interim order, hereby issue the following directions: a. F6 Finserve Private Limited, F6 Commodities Private Limited, Mr. Pankaj Goel, Mr. Parveen Sharma, Mr. Meenu Goel, Mr. Sanjay Anand, Ms. Kavita Anand, Ms. Asha Sharma, Mr. Deepak Goel and Ms. Ruchika Goel are restrained from accessing the securities market and are further prohibited f....