Sebi bars stock broker for six months; fines Guiness Securities Rs 11 lakh

Markets regulator Sebi has barred a stock broker for the period of six months for submitting documents with regard to trades without actually executing it on the exchange.

In an order, the regulator said that BSE registered stock broker Vishal Vijay Shah "has not only connived with its two clients in creating false and fictitious records of trades for a fraudulent purpose of factoring the profit/losses but has also misused the purpose of registration of stock broker granted to him".

The regulator had conducted an examination from March 2009 to 2011 into the matter of front-running in the trades of Sterling Group by certain entities, which included the two clients of Shah.

During the investigation, the regulator found that Shah submitted fake documents related to trading - which were never executed on the exchange. And the two entities were not even registered with him as clients.

By engaging in such activities, Shah violated Stock Brokers Regulations and PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms, Securities and Exchange Board Of India (Sebi) said in an order dated December 12.

The mechanism of the stock market is structured in such a manner that no investor can access the trading platform of the stock exchanges without getting itself registered/ enrolled with any one of the stock brokers, Sebi noted.

Accordingly, Sebi barred Shah for six months and said that the debarment period would come into force on expiry of twenty one days from the date of the order.

In a separate order, Sebi fined Kolkata-based Guiness Securities Rs 11 lakh for violating code of conduct for depository participants (DP).

"The violations committed by the Noticee (Guiness) are procedural lapses indicating a lack of thoroughness and a casual and a lax attitude towards compliance with the documentation", Sebi said.

The depository participant cannot be permitted to take its responsibility casually, that would defeat the purpose of circulars, the DP regulations as well as Depositories Act, Sebi added.