Sebi Cancels Registration of 39 Stock Brokers, 7 Commodity Brokers After They Fail To Meet Registration Requirements; Entities Remain Liable for Actions Taken As Stock Brokers

New Delhi, August 30: Capital markets regulator 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. Sebi Proposes Mandatory Maintenance of Communication Record for 8 Yrs.

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. Sebi Mulls Proposals on Public Interest Directors' Appointment Process at Market Infra Institutions.

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. Therefore, these entities are no longer participants of any depositories and do not meet the registration requirements under the DP Regulations, 2018. Accordingly, their registration has been cancelled after following the process outlined in the Intermediaries Regulations, 2008.

Also, Sebi said all these entities will have to ensure to "arrange for maintenance and preservation of records and other documents required to be maintained under the relevant regulations; redressal of investor grievances; transfer of records, funds or securities of its clients; continuity of service to its clients; and necessary actions with respect to the defaults or pending action, 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 C.M. 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 are among the 22 entities whose registration has been cancelled as depository participants.