Sebi showcause notices to 500 brokers

The Securities and Exchange Board of India (Sebi) has sent showcause notices to as many as 500 brokers, representing almost 70 per cent of the total number of active brokers in the stock markets.

These notices have been issued for violations ranging from failure to issue contract notes on time to alleged misuse of client's funds.

Over the last month, Sebi has received replies from a majority of brokers, and is currently in the process of finalising follow up action in each case. Sebi has also launched around 125 prosecutions in the current year so far, covering 2,595 persons.

All this is part of Sebi's efforts at tightening its own surveillance machinery and tying up the loose ends in its follow up actions.

According to Sebi insiders, the action initiated so far in this year is part of its strategic action plan drawn up at the beginning of the year.

This is all being done to further the case for "preserving the integrity of the markets and making it safer for small investors."

In fact, during the current financial year Sebi has been vigorously exercising its search and seizure powers at some of the brokers' premises.

In one case the regulator has also filed a first information report (FIR) against the broker for indulging in illegal trading outside the premises of the stock exchange (a practice called dabba trading).

Sebi has been particularly diligent in terms of follow through action as well in terms of enforcing its penalties on those who transgress and violate regulations.

For instance, more than 200 orders and directions were issued, either by the chairman himself or the wholetime member, against brokers and other market intermediaries such as merchant bankers and registrars.

Confidence building measures

Sebi is finalising follow up action after receiving replies from most brokers

It has also launched around 125 prosecutions in the current year, covering 2,595 persons.

All this is part of Sebi's efforts at tightening its surveillance machinery.