Description
SEBI issues final order against Gogia Capital Services Limited for violations including net worth shortfall, improper maintenance of books, engaging in non-securities business, and non-settlement of client 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 (Registration No. INZ000202733), a registered stock broker. The order follows a thematic inspection conducted by SEBI along with BSE, NSE, and MCX for the period April 01, 2022 to July 31, 2023, which revealed multiple violations of securities regulations.
Key Points
- Gogia Capital Services Limited is a SEBI-registered stock broker (Reg. No. INZ000202733, PAN: AAACG2906L)
- Thematic inspection conducted for the period April 01, 2022 to July 31, 2023
- Inspection findings communicated via letter dated November 30, 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 Changes
No new regulatory changes introduced. This order enforces existing regulations under:
- SEBI Act, 1992
- SEBI (Intermediaries) Regulations, 2008
- Securities Contracts (Regulation) Rules, 1957
- SEBI (Stock Brokers) Regulations, 1992
Compliance Requirements
Violations Alleged:
Net Worth Shortfall and Improper Maintenance of Books of Accounts
- Violated Section 12(1) of SEBI Act, 1992
- Violated SEBI Circular no. FITTC/DC/CIR-1/98 dated June 16, 1998
- Violated Regulation 9(g) read with Schedule VI of Stock Brokers Regulations
Engagement in Non-Securities Business with Personal Financial Liability
- Violated Rule 8(3)(f) of SCRR
- Violated SEBI Master Circular no. SEBI/HO/MIRSD/MIRSD-PoD-1/CIR/2023/71 dated May 17, 2023
- Violated SEBI Circular no. SMD/Policy/Cir-6 dated May 07, 1997
Non-Settlement of Clients’ Funds and Securities
- Violated Clause 47.1.1 and 47.8 of SEBI Master Circular
- Violated Clause 12(e) of Annexure A of SEBI Circular no. MIRSD/SE/Cir-19/2009 dated December 03, 2009
- Violated Clause 8.1 of Annexure to SEBI Circular no. SEBI/HO/MIRSD/MIRSD2/CIR/P/2016/95 dated September 26, 2016
- Violated Clause 5.4 of SEBI Circular no. SEBI/HO/MIRSD/DOP/P/CIR/2021/577 dated June 16, 2021
- Violated SEBI Circular no. SEBI/HO/MIRSD/DOP/P/CIR/2022/101
Important Dates
- Inspection Period: April 01, 2022 to July 31, 2023
- Inspection Findings Communicated: November 30, 2023
- Noticee Response Submitted: December 05, 2023
- Designated Authority Appointed: March 06, 2024
- Show Cause Notice Issued: March 28, 2024
- Order Reference: WTM/AN/MIRSD/MIRSD-SEC-2/31704/2025-26
Impact Assessment
Market Impact: This enforcement action demonstrates SEBI’s ongoing supervisory efforts to ensure compliance by registered intermediaries. The violations relate to fundamental requirements for stock brokers including net worth maintenance, proper record-keeping, and protection of client funds.
Operational Impact: Clients of Gogia Capital Services Limited may be affected, particularly those with unsettled funds and securities. The non-settlement of client funds and securities is a serious violation that directly impacts investor protection.
Regulatory Significance: The action underscores the importance of:
- Maintaining minimum net worth requirements
- Proper maintenance of books of accounts
- Avoiding conflicts of interest through engagement in non-securities business
- Timely settlement of client funds and securities
Investor Protection: The violations, particularly non-settlement of client funds and securities, pose direct risks to investors dealing with the broker. This enforcement action serves as a deterrent for other intermediaries.
Impact Justification
Enforcement action against a registered stock broker for multiple regulatory violations. Medium impact as it affects one intermediary and clients of Gogia Capital Services Limited.