Sebi conducted an inspection of books and records of the broker from April 2010 to August 2011 to ascertain whether it had carried unregistered PMS activities, before obtaining registration as PMS in July 2010, through its 'Option Maxima Strategy'.
"In the current scenario, noticee (Aditya Birla Money) did not have any agreement with its clients to act as their portfolio manager, as it was demonstrated and accepted that noticee was advising its clients, providing incidental advice is allowed in broker regulations.."
"..However, I note that noticee was the one who was directing its clients as well, i.e., it was the one who was taking the trading decision based on its expert team (centrally located), ticket size was almost similar as that prescribed under Sebi Portfolio Manager Regulation," Sebi Adjudicating Officer Sahil Malik said in an order.
Accordingly, the Securities and Exchange Board of India levied the fine on the stock broker.
In a separate order, Sebi has imposed a penalty of Rs 10 lakh on Jangoo Dalal, non-executive director of Smartlink Network System, for violating the regulatory norm.
"I find Jangoo guilty as he had traded during trading window closure and not procured pre-clearance of his trade during the trading window closure period," Malik said.
By indulging in such activity, Dalal has violated Model Code of Conduct specified in the Prohibition of insider trading (PIT) Regulations.