J.P. Devadhar, Presiding Officer
1. This appeal by consent of counsel for parties is heard finally at the stage of admission.
2. Appellant is aggrieved by adjudication order dated June 6, 2013 whereby total penalty of Rs.1,50,000/- (Rs.50,000/- under Section 15A(c), Rs.50,000/- under section 15B and Rs.50,000/- under Section 15 HB of Securities and Exchange Board of India Act, 1992) has been imposed upon the appellant.
3. Mr. Shetty, learned counsel appearing on behalf of appellant fairly conceded that there were deficiencies in the functioning of the appellant. However, he pleaded that since the lapses were procedural lapses, appellant ought to have been let off with warning to be more careful in future instead of imposing penalty. Alternatively, he submitted that the penalty imposed is excessive.
4. Deficiencies in the functioning of the appellant noticed in the impugned order as follows:
'(a) KYC Forms and Agreements, (b) Prevention of Money Laundering Compliances, (c) Compliance with certain SEBI Circulars, (d) Margin Collection and Reporting (F&O Segment), (e) Analysis of Client Master, (f) Analysis of Client Codes allotted to the client, (g) Irregularities in handling of funds/securities, (h) Client’s outstanding balances and (i) Third party receipts.'
5. It is contended by counsel for appellant that the above deficiencies were on account of negligence on the part of Shri Manish Mathur, CEO of the appellant and penalty of Rs.10,00,000/- has already been imposed upon Shri Manish Mathur. It is a matter of record that as soon as deficiencies were brought to the notice of the appellant, remedial steps have been taken by the appellant by terminating the services of Shri Manish Mathur and curing the deficiencies. In these circumstances, counsel for appellant submitted that penalty imposed upon the appellant be set aside on such terms and conditions as this Tribunal deems fit and proper.
6. Counsel for respondent submits that in view of various deficiencies noticed during the investigation period, penalty imposed upon appellant is reasonable and does not warrant interference.
7. We have carefully considered rival submissions.
8. Deficiencies noticed in the impugned order are procedural deficiencies and do not involve any fraudulent action on the part of the appellant. Since penalty upon Shri Manish Mathur, CEO of appellant has already been imposed and penalty is imposed upon appellant as vicarious liability, in our opinion, it would be just and proper to restrict penalty at Rs.50,000/- instead of Rs.1,50,000/-.
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/> 9. Accordingly, while upholding the decision of SEBI in imposing penalty on account of deficiencies noticed during the investigation period, we restrict the penalty at Rs.50,000/- instead of Rs.1,50,000/-. 10. Appeal is disposed of in the above terms with no order as to costs.