Sebi imposes Rs 25 lakh fine on Angel Broking

Securities and Exchange Board of India (Sebi) Tuesday slapped fine totalling Rs 25 lakh on Angel Broking Pvt Ltd and sub-broker Pradeep A Ramnani for violating capital market norms.

A penalty of Rs 20 lakh has been imposed on Angel Broking while its sub-broker Ramnani has been fined Rs 5 lakh.

The order came after the Sebi found "serious lapses" by them in terms of non-compliance with stock broker regulations.

Sebi had conducted an inspection of the books of Ramnani on September 30, 2013, to check whether the entity violated any securities law. The period was covered from April 2012 to March 2013.

During inspection, it was also found that Angel Broking had allowed Ramnani who was not having necessary qualification to operate F&O trading terminal and had wrongly uploaded certificates of a third person into qualification/records of Ramnani.

The latter had executed trades in F&O segment, without having necessary NCFM (NSE Certification in Financial Markets) qualifications in derivative market segment.

In the 26-page order, Sebi's Adjudicating officer Rachna Anand said the "serious foul play of the stock broker (Angel Broking)" cannot be ignored as it is the main intermediary for carrying out the transactions on behalf of the clients and is responsible for the acts of the sub-broker.

Besides, the stock broker is primarily liable to ensure the requisite NCFM qualifications are there for the person who is being given trading terminal as authorised person, the order noted.

"Undoubtedly, it is the duty of the stock broker not to allow such practice of wrongly using/ wrongly uploading certificates of third person(s) in favour of the authorised person and allow the authorised person to operate the trading terminal without having the required NCFM certification," it said.

"I am of the view that besides the fault of noticee no 1 (Ramnani), there was more serious deliberate lapse/ irregularity on the part of stock broker/ noticee no 2 (Angel Broking). Hence, noticee no 2 deserves imposition of higher monetary penalty as compared to noticee no 1," Anand said.

There was no immediate comment from Angel Broking on the order.

The adjudicating officer also said that violation of circulars issued by Sebi to the intermediaries, poses significant risk to the orderly functioning of the securities market.