Capital markets regulator Sebi levied a penalty of Rs 45 lakh on Korp Securities Pvt Ltd for facilitating two debarred entities to indirectly deal in the securities market during the period of restraint. The two entities– Beejay Investment & Financial Consultants and Eversight Tradecomm Pvt Ltd– were banned by the regulator from accessing the securities market and prohibited them from buying, selling or dealing in securities market directly or indirectly in June 2009.
However, the regulator during a probe conducted between June 2009 and November 2012 found that the debarred firms transferred large funds to two inter-connected entities which in turn used these funds to deal in shares at stock exchanges through stock broker Korp Securities.
It was also noted that Beejay had also directly transferred large funds to Korp during the investigation period, Sebi said in its order dated July 10.
The two inter-connected entities –Divyadrishti Merchants Pvt Ltd and Divyadrishti Traders Pvt Ltd — to whom the funds were transferred by debarred firms were also connected to Korp Securities, Sebi noted.
Korp Securities by facilitating the trades of the debarred entity, “has acted detrimental to the interests of the securities market” Sebi said.
By doing so, Korp has violated provisions of the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) Regulations.
“Further, Noticee, being a registered stock broker failed to maintain fairness in its conduct, follow proper due diligence required in its dealings as a stock broker, and hence, Noticee violated provisions of Code of Conduct for Stock Brokers under the Regulation 9 of Stock Broker and Sub-broker Regulations 1992,” the order added.
Accordingly, a total fine of Rs 45 lakh has been slapped on Korp Securities for various violations.
Source- Economic Times.