Sebi takes tough action: 39 stock brokers, 7 commodity brokers face cancellation of registration

Financial markets regulator Sebi on Friday cancelled the registration of 39 stock brokers and seven commodity brokers after they failed to meet registration requirements.

In addition, the regulator has cancelled the registration of 22 depository participants who are no longer affiliated with any depository.

The primary reason for cancelling the registration certificate of these entities is to prevent them from misusing their Sebi registration without being an active participant of a depository or a member of a recognised stock exchange, thereby protecting unsophisticated investors, the regulator said in three separate orders.

Despite cancellation of their registration, these entities remain liable for all actions taken or omitted to be taken by them as stockbrokers, commodity dealers or depository participants. They are also liable for payment of all outstanding fees, dues and interest due to Sebi, it added.

In its orders, Sebi said 39 stock brokers and seven commodity brokers have been granted registrations subject to certain conditions, including continuing to be members of a recognised stock exchange.

Considering that these entities are no longer members of any stock exchange, Sebi noted that these entities no longer qualify for registration as stock brokers under the Stock Brokers Regulations, 1992, which mandates that stock brokers should be members of recognised stock exchanges.

Sebi noted that these entities have been expelled as members by the stock exchanges and this information has been communicated to them.

“Since the notice holders are no longer members of any recognised stock exchange, they no longer fulfil the conditions stipulated in the… Brokers Regulations, 1992 under which the certificate of registration was granted to the notice holders,” Sebi said.

After following due procedures as described in the Intermediaries Regulations, 2008, Sebi has cancelled the registration certificates of these stock brokers.

Out of 22 depository participants, the depositories have informed the regulator that their agreements with these entities are terminated and this has been communicated to them, Sebi noted.

Accordingly, these entities are no longer participating in any depository and do not meet the registration requirements under the Financial Intermediaries Regulations, 2018. Accordingly, their registration has been cancelled after following the process outlined in the Financial Intermediaries Regulations, 2008.

Further, Sebi said that all such entities will have to ensure “arrange for maintenance and preservation of records and other documents required to be maintained under the regulations in force; redressal of investor grievances; transfer of records, funds or securities of its clients; continuity of service to its clients; and necessary action on defaults or pending actions, if any”.

The 39 stock brokers whose registrations have been cancelled include Bezel Stock Brokers, Reflection Investments, Sumpoorna Portfolio, Vineet Securities, Quantum Global Securities, Wellindia Securities, Vrise Securities, Credential Stock Brokers, Aanya Commodities, Amber Solutions, Arcadia Share & Stock Brokers and CM Goenka Stock Brokers, Destiny Securities.

Seven commodity brokers whose registrations have been cancelled are: Wealth Mantra Commodities, Sumpoorna Comtrade, Chaitanya Commodities, BVK Pulses Online Trading Company, Infonic India Financial Services, Financial Leaders Commodities and Wellindia Commodities Integrated Stock Broking Services, Moongipa Investments, ASL Capital Holdings, Atlanta Share Shopee, Wealth Mantra, Punjab and Maharashtra Co-Operative Bank, Max Planwealth Securities, Bright Shares and Stock among the 22 entities whose registrations have been cancelled as depository participants.

(This article has not been edited by News18 staff and is published from a syndicated news agency feed – PTI)