• PAGE ONE
• INDEX
• HOME

SEBI deletes CSE's maximum fine norm

K.R. Srivats

NEW DELHI, Dec. 25

THE Securities and Exchange Board of India (SEBI) has stepped in and exercised its powers to delete the maximum fine of Rs 25,000 that can be imposed on an erring member of the exchange under the Articles of Association of Calcutta Stock Exchange Associa tion Ltd.

Sources said that the capital market regulator had on September 12, directed the Calcutta Stock Exchange to amend its Article 29 of the Articles of Association (AOA) so as to remove the maximum fine (Rs 25,000) that can be imposed on an erring member and to provide for a fine depending on nature and gravity of violations within a period of 60 days.

However, the exchange had not amended Article 29 even after expiry of 60 days stipulated by the directives of SEBI. Sources said that attempts made by the exchange to amend the provisions of the Articles enabling an increase in the existing amount of fin e ended in vain on account of the resistance from members.

``SEBI has now used its powers under Section 8(2) of the Securities Contracts Regulation Act to direct the removal of maximum fine of Rs 25,000'', they said.

The paltry sum of Rs 25,000 as fine was not viewed as a deterrent, given the large volumes of private deals (commonly described as unofficial badla) that had been struck by members of the exchange.

In fact, the CSE authorities had told the members of the Joint Parliamentary Committee that the exchange did not have any authentic information on the amount involved (lost) in the unofficial badla market.

They, however, acknowledged that the exchange was aware through market information and intelligence that a large number of members of the Exchange were involved in the unofficial badla.

After carrying out some inspections in 1999 and on the basis of indirect evidence, the matter was placed before a disciplinary action sub-committee. Some of the members were fined Rs 25,000 as that was the maximum fine that could be levied in accordance with the Articles of Association of the Exchange.