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The market regulator Securities and Exchange Board of India (SEBI) issued a warning to the listed broking house Angel One to exercise more care and diligence in the conduct of its business.
In an order dated August 22, SEBI said that its officials investigated the brokerage between September 14, 2009, and March 8, 2013, for various violations, and the designated authority recommended that the brokerage’s registration certificate be suspended for three months. The regulator’s Executive Director Anand R Baiwar considered the DA’s recommendations and the brokerage’s submissions.
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The six allegations were poor procedures for client introduction and verification of client’s contact details, failure to report suspicious transactions that were not commensurate with transacting parties’ income, weak KYC procedure, improper checks to ensure that only authorised people instruct dealers to place trades, and lack of diligence when dealing with bogus entities which were its clients.
Baiwar found the brokerage’s dereliction with respect to two of these allegations — to not have exercised due diligence with the KYC forms, with the location of the clients entered wrongly as that of the brokerage’s employees; and to have failed to exercise due skill and care “insofar, it accepted orders from the unauthorised individuals”.
He did not find merit in the other allegations and said that considering the three-month suspension of registration was unwarranted.
“I hold that the noticee failed to exercise due diligence as it did not ensure that the ‘Place’ section in the KYC forms was duly filled in by the clients and accepted orders from unauthorized individuals. However, considering the mitigating factors such as a lapse of a considerable amount of time from the time of violations and subsequent requisite corrective measures taken by the noticee, I am of the view that a three months suspension at this point in time as recommended by the DA is not warranted. I, therefore, disagree with the quantum of punishment recommended by the DA and hold that issuance of regulatory censure to the noticee would be reasonable and would meet the ends of justice in the instant case,” wrote Baiwar.
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