Sebi cracks down on defaulters

New Delhi: Capital markets egulator Sebi on Friday cancelled the registration of 39 stock-brokers and seven commodity-brokers after they failed to meet the registration requirements.Additionally, the regulator cancelled the registration of 22 depository participants who are no longer affiliated to any depository. The main 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 recognized stock exchange, thereby protecting unaware investors, the regulator said in three separate orders.Despite the cancellation of their registration, these entities remain liable for any actions they took or failed to take as stock-brokers or commodity brokers or depository participants. They are also responsible for paying any outstanding fees, dues, and interest owed to Sebi, it added.

In its orders, Sebi said that 39 stock-brokers and seven commodity brokers were granted registrations subject to certain conditions, including the condition that they continue to be members of a recognised stock exchange. Considering these entities are no longer members of any stock exchange, Sebi noted that these entities no longer meet the conditions required for holding a stock-broker registration under the Broker Regulations 1992, which stipulates that stock-brokers must be members of recognized stock exchanges. Sebi noted that these entities were expelled as members by the stock exchanges, and this information was communicated to them. “Since the noticees are no longer holding membership of any recognized stock exchange, they no longer fulfil the conditions stipulated under...Broker Regulations, 1992 by which certificate of registration was granted to the noticees,” Sebi said.

After following the proper procedures outlined in the Intermediaries Regulations, 2008, Sebi has cancelled the registration certificates of these stock-brokers. On 22 depository participants, depositories have informed the regulator that their agreements with these entities were terminated and this has been communicated to them, Sebi noted.