Description
SEBI order under Section 12(3) of SEBI Act, 1992 following inspection of Stockholding Services Limited (formerly SHCIL Services Limited) for violations during April 2021 to October 2022.
Summary
SEBI issued a final order under Section 12(3) of the SEBI Act, 1992 read with Regulation 27 of SEBI (Intermediaries) Regulations, 2008 against Stockholding Services Limited (formerly SHCIL Services Limited), a registered stock broker (Registration No. INZ000199936, PAN: AAJCS5661H). The order follows a comprehensive inspection conducted jointly with stock exchanges from November 29, 2022 to December 8, 2022, covering the period from April 1, 2021 to October 31, 2022, which revealed violations of SEBI (Stock Brokers) Regulations, 1992 and applicable circulars.
Key Points
- SEBI conducted comprehensive inspection of Stockholding Services Limited from November 29, 2022 to December 8, 2022
- Inspection period covered April 1, 2021 to October 31, 2022
- Inspection findings communicated to the Noticee on January 17, 2023
- Enquiry proceedings initiated on March 13, 2024 with appointment of Designated Authority
- Pre-Enquiry Show Cause Notice issued on May 31, 2024 under Regulation 25(1) of Intermediaries Regulations
- Noticee filed settlement application which was subsequently withdrawn
- Personal hearing conducted on November 13, 2024
- Post-enquiry Show Cause Notice issued on January 9, 2025
- Final order issued under Section 12(3) of SEBI Act, 1992
Regulatory Changes
No new regulatory changes introduced. This is an enforcement action based on existing regulations:
- SEBI (Stock Brokers) Regulations, 1992
- SEBI (Intermediaries) Regulations, 2008
- Applicable SEBI circulars and stock exchange circulars
Compliance Requirements
Stockholding Services Limited (formerly SHCIL Services Limited) is required to comply with:
- SEBI (Stock Brokers) Regulations, 1992
- SEBI (Intermediaries) Regulations, 2008
- All applicable SEBI circulars and stock exchange circulars
- Directives issued in the final order under Section 12(3) of SEBI Act, 1992
Important Dates
- April 1, 2021 to October 31, 2022: Inspection period
- November 29, 2022 to December 8, 2022: SEBI inspection conducted jointly with stock exchanges
- January 17, 2023: Inspection findings communicated to Noticee
- February 1, 2023: Noticee’s response received
- March 13, 2024: Designated Authority appointed for enquiry proceedings
- May 31, 2024: Pre-Enquiry Show Cause Notice issued
- October 25, 2024: Notice for reply and personal hearing issued
- November 4, 2024: Noticee filed reply
- November 13, 2024: Personal hearing conducted
- November 19, 2024: Additional submissions filed by Noticee
- January 9, 2025: Post-enquiry Show Cause Notice issued
Impact Assessment
Market Impact: Limited direct market impact as this is an enforcement action against a single intermediary. However, it reinforces SEBI’s commitment to strict compliance monitoring of stock brokers and intermediaries.
Operational Impact: Stockholding Services Limited faces regulatory scrutiny and potential sanctions based on the violations identified during the inspection period. The lengthy enquiry process (from March 2024 to January 2025) indicates serious compliance concerns.
Industry Impact: This order serves as a reminder to all registered stock brokers and intermediaries about the importance of maintaining strict compliance with SEBI regulations and circulars. Regular inspections and enforcement actions demonstrate SEBI’s active supervision of market intermediaries.
Compliance Impact: Other stock brokers should review their compliance frameworks to ensure adherence to Stock Brokers Regulations, Intermediaries Regulations, and all applicable circulars to avoid similar enforcement actions.
Impact Justification
Enforcement action against registered stock broker following comprehensive inspection and enquiry proceedings for compliance violations during inspection period April 2021 to October 2022