Description

SEBI issues final order against Gogia Capital Services Limited (Stock Broker, Reg. no. INZ000202733) for violations including shortfall in net worth, improper maintenance of books, engaging in other business, and non-settlement of clients' funds and securities.

Summary

SEBI has issued a final order under Section 12(3) of SEBI Act, 1992 read with Regulation 27 of SEBI (Intermediaries) Regulations, 2008 against Gogia Capital Services Limited (PAN: AAACG2906L), a registered stock broker (Reg. no. INZ000202733). The order follows a thematic inspection conducted by SEBI along with BSE, NSE, and MCX for the period from April 01, 2022 to July 31, 2023. A Designated Authority was appointed on March 06, 2024 to enquire into the violations and issued a show cause notice on March 28, 2024.

Key Points

  • Gogia Capital Services Limited is a SEBI-registered stock broker with registration number INZ000202733
  • Thematic inspection conducted by SEBI, BSE, NSE, and MCX for period April 01, 2022 to July 31, 2023
  • Inspection findings communicated on November 30, 2023; Noticee replied on December 05, 2023
  • Enquiry proceedings initiated under SEBI (Intermediaries) Regulations, 2008
  • Designated Authority appointed on March 06, 2024
  • Show cause notice issued on March 28, 2024

Regulatory Violations

The alleged violations against Gogia Capital Services Limited include:

  1. Shortfall in net worth and improper maintenance of books of accounts - Violation of Section 12(1) of SEBI Act, 1992 read with SEBI Circular no. FITTC/DC/CIR-1/98 dated June 16, 1998, and Regulation 9(g) read with Schedule VI of Stock Brokers Regulations

  2. Engaging as principal or employee in business other than securities involving personal financial liability - Violation of Rule 8(3)(f) of SCRR read with SEBI Master Circular no. SEBI/HO/MIRSD/MIRSD-PoD-1/CIR/2023/71 dated May 17, 2023 and circular no. SMD/Policy/Cir-6 dated May 07, 1997

  3. Non-settlement of clients’ funds and securities - Violation of Clause 47.1.1 and 47.8 of SEBI Master Circular read with multiple SEBI circulars including:

    • Clause 12(e) of Annexure A of SEBI Circular no. MIRSD/SE/Cir-19/2009 dated December 03, 2009
    • Clause 8.1 of Annexure to SEBI Circular no. SEBI/HO/MIRSD/MIRSD2/CIR/P/2016/95 dated September 26, 2016
    • Clause 5.4 of SEBI Circular no. SEBI/HO/MIRSD/DOP/P/CIR/2021/577 dated June 16, 2021
    • SEBI Circular no. SEBI/HO/MIRSD/DOP/P/CIR/2022/101 dated [truncated in source]

Compliance Requirements

  • Stock brokers must maintain minimum net worth requirements as per regulatory provisions
  • Proper maintenance of books of accounts is mandatory under Schedule VI of Stock Brokers Regulations
  • Stock brokers cannot engage in other business activities involving personal financial liability without proper authorization
  • Timely settlement of clients’ funds and securities is mandatory under various SEBI circulars
  • Compliance with SEBI (Intermediaries) Regulations, 2008 is required for all registered intermediaries

Important Dates

  • April 01, 2022 to July 31, 2023: Inspection period
  • November 30, 2023: Inspection findings communicated to Noticee
  • December 05, 2023: Noticee submitted reply to inspection findings
  • March 06, 2024: Designated Authority appointed for enquiry proceedings
  • March 28, 2024: Show cause notice issued to Noticee
  • October 07, 2025: Final order date

Impact Assessment

Regulatory Impact: This enforcement action demonstrates SEBI’s continued vigilance in monitoring stock broker compliance with net worth requirements, client fund protection norms, and restrictions on engaging in other businesses. The action reinforces the regulatory framework governing intermediaries.

Market Impact: Limited direct market impact as this pertains to a single intermediary. However, it serves as a reminder to all stock brokers about the importance of maintaining regulatory compliance, particularly regarding net worth requirements and client fund settlement obligations.

Client Impact: Clients of Gogia Capital Services Limited may be affected due to non-settlement of funds and securities. The enforcement action aims to protect investor interests and ensure compliance with client protection norms.

Industry Impact: The order reinforces regulatory expectations for all stock brokers regarding maintenance of net worth, proper book-keeping, restriction on engaging in other businesses, and timely settlement of client obligations. Other intermediaries should review their compliance with similar requirements.

Impact Justification

Enforcement action against a registered stock broker for multiple regulatory violations including net worth shortfall and non-settlement of client funds. Direct impact limited to the intermediary and its clients.