SAT sets aside fines on two brokers

Sebi in April this year had imposed penalty of Rs 8 lakh on Finquest Securities and of Rs 5 lakh on R R Chokhani

The Securities Appellate Tribunal today set aside orders of capital market regulator Sebi which had slapped Rs 13 lakh in fines on R R Chokhani Stock Brokers and Finquest Securities on charges of violating stock broker norms.

The Securities and Exchange Board of India in April this year had imposed penalty of Rs 8 lakh on Finquest Securities for violating code of conduct related to stock brokers.

It had also imposed Rs 5 lakh fine on R R Chokhani Stock Brokers in September 2012 on the same charges.

SAT has set aside the penalty on the ground that the mistake committed by two brokers were "venial" in nature.

"We set aside the penalty and direct appellant (R R Chokhani Stock Brokers and Finquest Securities) to be more careful in complying with regulatory norms prescribed by Sebi," SAT said in two similar worded orders.

In R R Chokhani Stock Brokers case, Sebi had imposed the penalty for allegedly carrying out trading for some clients who were related to the promoters of erstwhile Bank of Rajasthan (BoR) and received payment for the trades from entities other than their clients.

The matter relates to Sebi's investigation into the affairs of BoR for a period between June 2007 and December 2009. Later, BoR had been acquired by ICICI Bank.

Sebi fined Finquest Securities on charges of accepting payments from third parties and unrelated entities on behalf of its registered clients through normal banking channels like Real Time Gross Settlement and cheques. This violated the code of conduct of stock brokers.

The Tribunal found that the mistake committed by two brokers were "venial" in nature and moreover, the error has been rectified immediately on being brought to notice.

Therefore, SAT said, keeping in view the totality of facts and circumstances of that case as well as the venial nature of mistakes, it would be "just and proper" to warn the brokers to be more diligent in complying regulatory norms prescribed by Sebi.