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Certificate of registration of stockbrokers canceled to prevent the misuse of membership – THE SECURITIES AND EXCHANGE BOARD OF INDIA

Certificate of registration of stockbrokers canceled to prevent the misuse of membership – THE SECURITIES AND EXCHANGE BOARD OF INDIA

The stockbrokers registered under stock exchanges have been expelled from their membership by stock exchanges in terms of Section 12(1) of the Securities and Exchange Board of India Act, 1992 and Brokers regulation,1992, and certain conditions were granted to the stockbrokers including the condition that they continue to be a member of a recognized stock exchange. The current proceedings are conducted In the matter as the noticee qualifies for the grant of certificates. The proceedings are conducted by the appointed adjudication officer ANANTA BARUA WHOLE TIME MEMBER

The noticee is no longer holding the certificates as the Certificate of Registrations as a stock broker have been granted to the Notices subject to the conditions of registration provided under Regulation 9 of the Broker Regulations, 1992. In this regard, the  Regulations 9(a) of the Broker Regulations, 1992, one of the conditions of registration is that the stockbroker holds the membership of any recognized stock exchange and as the noticee are no longer holding the certificate it can be said that the noticee no longer fulfills the condition under Regulation 9(a) of the Broker Regulations, 1992 by which Certificate of Registration was granted to the Notices.

The current proceedings were initiated under Section 12(3) SEBI Act, 1992 read with Regulation 30A of the SEBI Regulations, 2008, and a show-cause notice was sent to notices as to why the certificate of registration granted under the Act or the regulations made thereunder, should not be canceled under Section 12(3) of the SEBI Act, 1992 read with Regulation 30A of the Intermediaries Regulations, 2008 and no reply was received from the notices.

From the provisions of law and from the available facts it was considered that the Certificate of Registrations have been granted by SEBI to the Notices subject to, the conditions of registration under Regulation 9 of the Broker Regulations, 1992, and the stock exchanges have informed SEBI that the Notices were expelled from their membership by them and the same has been communicated to the Noticees. the Noticees have ceased to satisfy the conditions of registration stipulated under Regulation 9 (a) of Broker Regulations, 1992 and the procedure of cancellation of registration has been followed properly and therefore the member considers that the certificate of registration as a stock broker, granted to the Noticees under the SEBI Act, 1992 and the Broker Regulations, 1992, should be canceled under Section 12(3) of the SEBI Act, 1992 read with Regulation 30A of the Intermediaries Regulations, 2008.

The following directions were also issued by exercising the powers conferred under Section 12(3) of the SEBI Act, 1992 read with Section 19 of the SEBI Act, 1992 and Regulation 30A of the Intermediaries Regulations, 2008, and registration of all 4 noticees was canceled. The main purpose for canceling the registrations was to prevent the misuse of their certificate of registration with SEBI, without being a member of a recognized stock exchange, on unaware investors and noticee will be held liable for the conduct of any such act. Hence the order was passed and will be enforced with immediate effect.

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Order reviewed by Naveen Sharma

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