SAT upholds Sebi order in a case of broker norm violation

The Securities Appellate Tribunal (SAT) has upheld Sebi's order against an individual in a case related to violations of broker norms and for not furnishing details sought by the market regulator.

While, the SAT has upheld the penalty of Rs 3 lakh by Sebi on one Sunita Gupta for carrying out broker activities without due registration, it has reduced a fine imposed on her to Rs one lakh from Rs 2 lakh with regard to non-compliance with market regulator's summons issued to her.

The matter relates to a probe by the Securities and Exchange Board of India (Sebi) probe into trading of shares of Sumeet Industries between October 1, 2006 and March 12, 2007.

The Sebi had found that Gupta had traded as an unregistered sub-broker in the BSE on behalf of various clients. She was allegedly trading through the stock broker, Parasram Holdings.

Gupta had challenged the Sebi's rulings before the SAT, which in an order today said Gupta "had carried on trading activity as sub-broker even before applying for registration which is in gross violation of...Regulations and has failed to furnish some material documents inspite of two summonses which is again in gross violation of... Sebi Act".

However, it said that since the Sebi's adjudicating officer had "erroneously" held that Gupta had failed to give income tax return for the year 2006-2007 "it would be just and proper to sustain penalty...To the extent of Rs 1 lakh".

"Accordingly, appeal is partially allowed by modifying the impugned order dated 23rd January, 2013 to the extent of reducing the penalty imposed...From Rs 2 lakh to Rs 1 lakh".

The SAT has asked Gupta to pay the fine within a period of 4 weeks failing which the Sebi will be entitled to recover the penalty amount with interest at 10% from the date of the order (December 12) till payment.

The Sebi's investigation had found that Gupta on December 18, 2006 had applied for registration as sub-broker but had commenced trading for her clients from December 15, 2006 through Parasram Holdings. Further, during the probe she had failed to furnish certain documents called for under the summons issued.