As per the regulations, depository participants are restricted from delegating their function to any other person, without the prior approval of the depository.
During an investigation, Sebi found that in the process of investor grievance redressal mechanism, there were certain complaints against Reliance Capital (notice) as a depository participant. The replies to those complaints were given by Reliance Securities Ltd (RSL) in the capacity of a depository participant.
The regulator conducted an inspection of Reliance Securities on August 13-14, 2012 for the duration of April 2010 to March 2012.
As per the information provided by Central Depository Services (India) Ltd (CDSL), the depository participant functions and all the relevant records/ documents of Reliance Capital had been transferred to Reliance Securities, according to a Sebi order.
The watchdog noted that Reliance Capital delegated its function as depository participant to Reliance Securities in violation of regulations and the Code of the Conduct under DP (Depositories and Participants) norms.
Also, the noticee was obligated to transfer securities to or from a beneficial owners account only on receipt of instruction from the beneficial owner but the noticee failed to provide any receipt of instruction (electronic or otherwise), the order noted.
“In this case, from the material available on record, any quantifiable gain or unfair advantage accrued to the noticee or the extent of loss suffered by the investors as a result of the default is not brought on record and is unascertainable.
“I note that the violations pertain to a year of 2010. I also note that there is nothing on record that there are investor complaints pending, as on date, against the noticee,” Sebi’s Adjudicating Officer Amit Pradhan said in the order while imposing the fine.
In a separate order on Tuesday, Sebi imposed a fine of Rs 6 lakh on one Monoranjan Roy for violating takeover norms while dealing in the shares of Pincon Lifestyle Ltd.
Separately, the regulator slapped Rs 3 lakh fine on Ind Barath Thermotek Pvt Ltd for its failure to make timely disclosures regarding the company’s financial results for the half year ended March 31, 2019.
