TaxTMI 
TaxTMI 
2012 (2) TMI 749
X X X X Extracts X X X X
X X X X Extracts X X X X
....(the Board). The present appeal has been filed by the appellant against the order dated October 13, 2011 passed by the whole time member of the Board holding the appellant guilty of violating the provisions of regulation 7 read with clause A(2) of the code of conduct as specified in Schedule II of the Securities and Exchange Board of India (Stock Brokers and Sub-brokers) Regulations, 1992 (stock brokers regulations) and prohibiting him from taking up new clients for a period of one month. 2. The facts of the case, in brief, are that the Board carried out investigations into the dealings of shares of Sawaca Communication Limited (the company) from October 4, 1999 to December 30, 1999. It was noted by the Board that price of the scrip had ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....a period of two months. In pursuance of the recommendations of the enquiry officer, a show cause notice dated March 22, 2005 was issued to the appellant asking him to show cause why an appropriate action including imposition of penalty be not taken against him. The appellant was also afforded a personal hearing. By his letter dated April 25, 2005 the appellant filed a detailed reply denying the charges. After affording personal hearing, the whole time member of the Board, vide impugned order dated October 13, 2011, though exonerated the appellant of the charge of violating FUTP regulations, held him guilty of allowing Mayekar to act as an unregistered sub-broker violating the code of conduct under the stock brokers regulations and prohibite....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... It is the case of the appellant that he had applied to the Board for registration as a sub-broker on the NSE on December 12, 2002 and his application was pending in the year 2004 when he executed the trades on NSE. His argument is that the proviso to Rule 3 which was then in force enabled him to trade as a sub-broker during the pendency of his application for registration. There is merit in this submission as well. These Rules were in force in the year 2004 and were repealed only w.e.f. September 7, 2006. The proviso to Rule 3 clearly enabled a person to deal as a sub-broker if he had made an application for registration which was pending. The adjudicating officer has rejected this argument on an erroneous ground. According to the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ree with the learned counsel for the respondent Board. In Aspi Noshir Gandhi's case the issue was whether having obtained registration as sub-broker on BSE and CSE, it was necessary for the appellant to get it registered as a sub-broker on NSE for executing trades. It is in this context that, relying on a Division Bench judgment of Delhi High Court in the case of NSE Member vs. Union of India [2006(133) COMP Cases 504], it was observed that single registration was enough for the appellant to function as a stock broker on all other stock exchanges. In the case in hand, Mayekar was not registered with any of the stock exchanges as sub-broker and the appellant allowed him to trade as its sub-broker. Therefore, the Board was right in holding th....