The Hindu Business Line : Kotak Securities fined Rs 10 lakh

Mumbai, Dec. 24 The Securities and Exchange Board of India on Wednesday imposed a fine of Rs 10 lakh on Kotak Securities Ltd (KSL) for alleged violations of SEBI Regulations pertaining to the Depository Participants in 2003.

According to a SEBI order, KSL has violated Regulation 41 of SEBI (Depositories and Participants) Regulations, 1996 by opening beneficiary accounts without entering into agreements with the clients and without taking signatures of the clients on the beneficiary account opening applications.

These beneficiary accounts were opened to enable the clients to have “delayed payment facility” which is similar to margin trading, the SEBI order said. Regulation 41 says, “Every participant shall enter into an agreement with a beneficial owner before acting as a participant on his behalf, in a manner specified by the depository in the bye-laws.

SEBI also alleged that KSL violated Regulation 42(1) by co-mingling, mixing each of the beneficial owners’ securities with the securities of the other beneficial owners.

KSL also allegedly violated Regulation 54 by delaying the dispatch of the Demat Request Forms received by them, by more than seven days.

A KSL spokesperson said “We will be appealing against the order to SAT (Securities Appellate Tribunal).”

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