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SEBI cancel's broker registration for illegal trading

SEBI said the broker Chotai had executed trades outside the trading mechanism provided by BSE and also tried to persuade BSE officials for not reporting the matter to the regulator

Mumbai: Capital market regulator Securities and Exchange Board of India (SEBI) has cancelled the registration of a Samir K Chotai as a stock broker for allegedly indulging in illegal trading activities that were not in the interest of the investors, reports PTI.


In its order, SEBI said Chotai failed to perform its duties as specified in the code of conduct for sub-brokers in the Broker Regulations.


"...hereby cancel the certificate of registration of the sub broker namely Samir K Chotai (trade name Om Shares and Securities)," SEBI said in its order issued on December 6.


SEBI said Chotai had executed trades outside the trading mechanism provided by BSE.


The regulator said it also observed that the enquiry report on the matter had noted that Chotai had attempted to persuade BSE officials for not reporting the findings of inspection to SEBI.


"Such attempts are unethical and unsuited to an intermediary who shares the responsibility of developing the securities market along with the regulator," SEBI said.


SEBI on receipt of certain complaints regarding illegal trading activities at Porbandar (Gujarat) advised the BSE to probe the entities concerned.


Accordingly, BSE carried out inspection of Chotai, a registered sub-broker operating under the trade name of Om Shares and Securities on 28 June 2004, the order said.


The inspection prima facie revealed that Chotai had indulged in illegal activities that were not in the interest of the investors.


Pursuant to the findings by BSE, SEBI in an interim order prohibited Chotai from accessing the securities market till the probe is completed and appropriate action taken upon receipt of the enquiry report.


The enquiry report submitted on 8 March 2011 recommended a penalty of cancellation of the Certificate of Registration of Chotai.



Vaibhav Dhoka

4 years ago

What action SEBI proposes to take on Kotak Securities Ltd for engaging services of Mateo Cons.Ltd as franchise's guideline says registration is mandatory for all intermediaries including sub-brokers.SEBI is shy of taking action against Kotak Securities Ltd for reason best known to SEBIs officials.

SEBI seeks Sahara account details from banks, help from RBI

SEBI has also written to Sahara group to furnish the details of bank accounts and properties held by them so as to enable it to take recourse to appropriate legal remedies as per the Supreme Court directions

New Delhi: Market watchdog Securities and Exchange Board of India (SEBI) has asked various banks to provide it all account details of the Sahara group as well as their promoters and directors, and is also seeking help from the Reserve Bank of India (RBI), Enforcement Directorate (ED) and Financial Intelligence Unit (FIU) as part of a multi-pronged probe into the entity, reports PTI.
Besides, SEBI has also written to Sahara group to furnish the details of bank accounts and properties held by them so as to enable it to take recourse to appropriate legal remedies as per the Supreme Court directions, the Parliament was informed last week.
The details of actions taken by SEBI, which also includes its request to Maharashtra and Uttar Pradesh governments to initiate civil and criminal proceedings against two Sahara group companies, were listed by Minister of State for Finance Namo Narain Meena in a written reply to a Lok Sabha question.
SEBI has also launched prosecution and adjudication proceedings against Sahara and its promoter/directors, Meena said, adding that the regulator is also regularly submitting to the Supreme Court a case status report approved by Justice BN Aggarwal, as per the court directions.
Meena said SEBI has written to "NABARD, Enforcement Directorate, Central Economic Intelligence Committee, RBI and Financial Intelligence requesting them to share with SEBI any material/information in their possession about the Sahara group of Companies, more particularly SIRECL and SHICL".
He added, "They were also requested to examine or inquire any possible violation of the provisions of law falling under their jurisdiction and share with SEBI the outcome of such examination/inquiry."
The Supreme Court on 31st August asked two Sahara group companies (SIRECL and SHCIL) to refund the amount collected through issue of OFCDs (Optionally Fully Convertible Debentures), with annual interest of 15%, within three months to SEBI, which was mandated to facilitate the repayment of the money to the bondholders.
As per the order, the total amount collected by these two companies had an outstanding balance of Rs24,029.73 crore as on 31 August 2011, the minister said, while adding that the Sahara group was also asked to furnish the documents relating to these investors within 10 days of the order.
As Sahara failed to meet the stipulated time limit, SEBI filed a contempt case before the Supreme Court. The group also filed two appeals before Securities Appellate Tribunal.
The appeal for extension in time for submission of documents to SEBI is listed for hearing on 20th December, while the second appeal for allowing deposit of money with the registrar of SAT was dismissed by the tribnual on 29th November.
The group then filed an appeal before the Supreme Court against the SAT decision, pursuant to which "an amount of Rs5,120 crore has been refunded to SEBI by the Saharas", the minister said. 
Meena further said that SEBI has written to the Chief Secretaries of Uttar Pradesh and Maharashtra, requesting them to direct initiation of civil/criminal proceedings against Sahara through the relevant state agencies.
This follows complaints received by SEBI from people that their investments in OFCDs have been switched over without their consent.
SEBI has also written to the depositories requesting them for details of holdings in demat accounts of the Sahara group and their promoters/directors, Meena said.
It has also released a series of ads in national dailies cautioning investors in Sahara not to yield to "any pressure from Saharas or their agents/officials for converting or switching over their existing investments in the bonds to any of their other schemes like Q Shop etc".
SEBI has also asked bondholders to hold on to their original documents and produce the same to it when called for, keeping in view the investor complaints received alleging "forceful conversion of OFCDs into instruments of other Sahara Group companies," Meena said.


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