 "Sebi, Securities and Exchange Board of India")
Markets regulator Sebi on Friday cancelled the registration of brokerage house Bharat Bhushan Finance and Commodity Brokers Ltd for participating in illegal 'paired contracts' launched by now defunct National Spot Exchange Ltd (NSEL).
In addition, the regulator has asked the broker to allow its existing clients to withdraw or transfer their securities or funds held in its custody within 15 days.
In case of failure of any clients to withdraw or transfer their securities or funds within this period, the broker will transfer the funds and securities of such clients to another broker within a period of the next 15 days thereon under the advice of the said clients.
The case relates to the participation of Bharat Bhushan Finance and Commodity Brokers in 'paired contracts' that did not have regulatory approval.
The broker traded in the alleged paired contracts from April 2012 to May 2013 on the screen based trading platform of NSEL on behalf of and in accordance with the instructions of the clients.
"The noticee (Bharat Bhushan Finance and Commodity Brokers) has participated/ facilitated the trading in 'paired contracts' on NSEL platform during the relevant period as a trading member/ clearing member... The act of Noticee in offering access to 'paired contract' ...also seriously calls into question the integrity, honesty and lack of ethical behaviour on its part," Sebi Executive Director Pramod Rao said in his order.
By indulging in such an act, Sebi said that Bharat Bhushan Finance and Commodity Brokers does not satisfy the "fit and proper person" criteria specified under Intermediaries Regulations and accordingly cancelled the registration of the broker.
More From This Section
In September 2009, NSEL (now defunct) introduced the concept of 'paired contracts' for trading, which allowed buying and selling of the same commodity through two different contracts at two different prices on the exchange platform.
Under this arrangement, investors could buy a short-duration contract and sell a long-duration contract and vice versa at the same time at a pre-determined price.
Further, it was noticed that trades for the buy contract and the selling contract used to happen on the NSEL on the same day at the same time and at different prices, involving the same counter-parties.
The scheme of 'paired contracts' traded on the NSEL ultimately caused a huge loss to investors to the extent of Rs 5,500 crore, the order noted.
In a separate order, the regulator has barred Capital Gain Research's proprietor Ruchit Gupta from the securities market for six months for providing unauthorised investment advisory services and asked him to refund investors' money collected through such services within three months.
Gupta was engaged in investment advisory services without obtaining a registration certificate from Sebi in violation of the provisions of Investment Advisers (IA) Regulations.
He had received Rs 79 lakh in his accounts till June 2019 through unregistered investment advisory activities, Sebi noted.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
