Sebi warns Motilal Oswal Securities against future lapse

NEW DELHI: Regulator Sebi today let off top broker Motilal Oswal Securities with a "strong warning" for executing trades of some debarred entities in Pyramid Saimira case and warned of stringent action for any future lapse.

Passing an order, Sebi said that the brokerage firm has already been slapped with a monetary penalty of Rs 75,000 by BSE for the same lapses, while it has also taken "corrective steps" in this matter.

"Considering all the facts and circumstances... I am of the view that the matter may be allowed to rest with a strong warning to the Noticee for executing trades on behalf of the clients who were debarred by the Ad-interim Ex-parte order dated April 23, 2009 passed by Sebi..." Sebi's Whole Time Member S Raman said in his order.

He also asked the brokerage firm "to be more careful and cautious in the conduct of its business and to adhere to and comply with all the statutory provisions while carrying out its activities in the securities market.

"Any future lapse on its part in complying with the said provisions shall invite stringent action."

The Securities and Exchange Board of India (Sebi) said that "being a registered stock broking firm, having a diversified client base and a group net worth of Rs 5.58 billion (as on March 31, 2012), the noticee ought to have put in place adequate systems to avoid such mistakes.

"The Noticee is bound to abide by the Code of Conduct at all times and to act in a prompt, ethical, and professional manner and exercise at all times, due skill, care and diligence in the conduct of all their business dealings," the Sebi order said.

It took note of the firm having taken corrective steps like deactivating the trading accounts of the concerned clients, withholding the proceeds of sale transactions, passing appropriate entries in the books of the clients, and stopping payout in respect of the said trades.

Motilal Oswal Securities had executed trades on behalf of three debarred clients -- Shailesh Jayantilal Shah, Rajesh Jayantilal Shah and Ritaben Rohitkumar Shah. These clients were restrained from the securities market in April 2009.