• Dispute in share trading

I have share trading account with karvy stock broking ltd,Palakkad branch,kerala.The branch manager promised good returns by trading and finally lost huge sum of money.I asked him to retrun the money.
He in turn gave a letter promising to refund the amount. This letter was given to me in month of January 2014.Without informing me he resigned from Karvy stock broking and left servise in the month of July 2014.

I gave a complaint with SEBI Chennai.The case is in the arbitration level. I wish to know wheather this will come under "Breach of trust". Or any other relevant case.

This Branch manager is the same person with whom I signed MCA agreement.This same person also gave a letter promising to refund the amount with his signature with companies seal.
Asked 2 years ago in Business Law from Palakkad, Kerala
1) did karvy stock broking offer you guaranteed returns 

2) in stock market you trade at your own peril . 

3) stock broker can merely guide you but do not promise any returns . stock market by nature is volatile 

4) it is necessary to go through MCA agreement signed by you 

5) further the claim filed by you with arbitrators need to be perused and reply filed by Karvy . 

6) if The branch manager has given you letter promising you to refund your money then you can hold the company liable provided it is as per terms of agreement signed by you with the broker
Ajay Sethi
Advocate, Mumbai
23328 Answers
1220 Consultations
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during pendency of arbitration case in SEBI u cannot take any other legal steps against that

ex-branch manager.

yes, it is cheating and breach of trust.
R.K. Nanda
Advocate, New Delhi
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0 Consultations
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Hello,
If Karvy Broking Company offered you huge profit in return for your investment and had stated so in the agreement you signed, then you can claim your refund and as the ex manager has has gotten a written assurance on the company letterhead with company seal this can be shown as evidence before the arbitrator.
Usually the the returns from share market are always quite volatile and the risk factor is always there as the business is quite speculative in nature.
Since you have already approached the Arbitrator you need to wait until his Verdict and take further steps accordingly
S J Mathew
Advocate, Mumbai
1950 Answers
65 Consultations
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Hi,
 Legally at present you can do nothing since the matter is before the arbitrator . SEBI shall not look into this  as per the general procedure, once the matter filed before the arbitrator ,the application before the ISC(Investor service center) shall be closed. Only option is an appeal after the arbitrator award or order
 If there is  an agreement holding the trading firm for the loss you can get them liable to pay it.
The manager who worked for the company is liable to the company and if he has agreed in writing to return the money , the company is liable to pay.
Thresiamma G. Mathew
Advocate, Mumbai
1316 Answers
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1. Investing in share market is a risky venture,

2. No body can guarantee good returns for such investment,

3. Such returns are totally market oriented which fluctuates depending on various economic factors,

4. Stock Broking Firm or a broker can nor guarantee good return,

5. The Stock Broking Firm can not be directed to return your investment by SEBI.
Krishna Kishore Ganguly
Advocate, Kolkata
12131 Answers
233 Consultations
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1. Does the agreement, which you signed with Karvy, contain an explicit promise that you will get good returns on your investment? If such a promise has been articulated in the agreement you can sue karvy.

2. Investment in share market is by its very nature full of uncertainty as to its result. SEBI cannot order karvy to refund your investment as you invested your money at your own peril knowing fully well that it may not yield the desired result.
Ashish Davessar
Advocate, Jaipur
18167 Answers
449 Consultations
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Dear Querist
As per contract act, the company is also liable for an act of Agent/representative, so the company as well as that manager, both are liable to be prosecuted under court of Law for civil and criminal cases.

as per your information that the manager has issued a written promise to return the money then first of all send a legal notice to him and demand your money back within 7 days from the receipt of the notice, if he is not ready to pay then you may file a civil suit for recovery against the manager.

as the SEBI is involved in this matter and matter is pending before arbitrator then till the final disposal of the arbitration proceedings, you should wait and watch....
Nadeem Qureshi
Advocate, New Delhi
3537 Answers
130 Consultations
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Yes it will amount to criminal breach of trust  fraud and cheating.you can sue the company manager and other staffs who are involved in the same.file a civil suit for recovering the same and lodge a police complaint for cheating fraud and criminal breach of trust
Jeshma Mohandas KP
Advocate, Kozhikode
567 Answers
1 Consultations
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CODE OF CONDUCT FOR SUB-BROKERS
(Regulation 15)
A. GENERAL
(1) Integrity : A sub-broker, shall maintain high standards of integrity,
promptitude and fairness in the conduct of securities business.
(2) Exercise Of Due Skill And Care : A sub-broker, shall act with due skill, care
and diligence in the conduct of securities business.
B. DUTY TO THE INVESTOR
(1) Execution Of Orders : A sub-broker, in his dealings with the clients and the
general investing public, shall faithfully and promptly place the orders for
buying and selling of securities. A sub-broker shall promptly inform his client
about the execution or non-execution of an order and promptly make
payment in respect of securities sold and arrange for prompt delivery ofsecurities purchased by clients.(2) Issue of confirmation memo:
(a) A sub broker shall issue to its clients confirmation memo in the format
prescribed by the stock exchange prominently mentioning, inter alia, Name of
the exchange where the transaction was executed, SEBI Registration number of
the sub broker, Name of the affiliated broker and its SEBI Registration no., the
reference of the contract note issued by the affiliated broker to the sub broker,
order no, trade no., order time, trade time, brokerage separate from the price.
(b) A sub-broker shall issue confirmation memo in the format prescribed in (a)
above on the same day of execution of trade.
(c) A sub-broker shall not match the purchase and sale orders of his clients an deach order must invariably be routed through a member-broker of the stock exchange with whom he is affiliated.
(d) A Sub broker shall promptly redress the grievances of its investors as soon asbrought to its knowledge.
(2) BREACH OF TRUST : A sub-broker shall not disclose or discuss or make
improper use of the details of dealings in securities and other information of a
confidential nature of the client which it comes to know in its business
relationship(4) BUSINESS AND BROKERAGE:
(a) A sub-broker shall not encourage sales or purchases of securities with the sole
object of generating brokerage.
(b)A sub-broker shall not furnish false or misleading quotations or give any other
false or misleading advice or information to the clients with a view of inducing
him to do business in particular securities and enabling himself to earn brokerage thereby.
(c) A sub-broker shall not charge from his clients a brokerage (including the
brokerage charged by the broker) exceeding two and half percentage of the trade
executed price.
Ajay Sethi
Advocate, Mumbai
23328 Answers
1220 Consultations
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1. Here no breach of trust has been committed by the Firm as per SEBI Rule,

2. The Manager representing the Firm has violated the Rule 2(a) by encouraging you in purchasing securities with the sole object of generating brokerage. You can complant against the Firm on the said account,

3. Investment in share is uncertain and there can not be an agreement for specific performance for an uncertain event. If any lottery ticket seller enters in to an agreement with  his customer assuring him that he will win prixe in the said lottery then this agreement is not valid legally.
Krishna Kishore Ganguly
Advocate, Kolkata
12131 Answers
233 Consultations
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Liability for contravention of the Act, rules or the regulations of SEBI.

25. A stock broker or a sub-broker who contravenes any of the provisions of the Act, 
rules or regulations framed thereunder shall be liable for any one or more of the 
following actions— 
 (i) Monetary penalty under Chapter VIA of the Act. 
 (ii) Penalties as specified under 59[Chapter V of the Securities and Exchange Board 
of India (Intermediaries) Regulations, 2008] including suspension or cancellation 
of certificate of registration as a stock broker or a sub-broker, 
 (iii) Prosecution under section 24 of the Act.  

the above rule/ section will help you in ur case against broker in SEBI.
R.K. Nanda
Advocate, New Delhi
457 Answers
0 Consultations
3.8 on 5.0
SCHEDULE II 
SECURITIES AND EXCHANGE BOARD OF INDIA 
(Stock Brokers and Sub-Brokers) Regulations 1992 
CODE OF CONDUCT FOR STOCK BROKERS 
(Regulation 7)


A. GENERAL (1) Integrity : A stock-broker, shall maintain high standards of integrity, promptitude and fairness in the conduct of all his business.
(2) Exercise Of Due Skill And Care : A stock-broker, shall act with due skill, care and diligence in the conduct of all his business.

(3) Manipulation : A stock-broker shall not indulge in manipulative, fraudulent or deceptive transactions or schemes or spread rumours with a view to distorting market equilibrium or making personal gains.

(4) Malpractices : A stock-broker shall not create false market either singly or in concert with others or indulge in any act detrimental to the investors interest or which leads to interference with the fair and smooth functioning of the market. A stock-broker shall not involve himself in excessive speculative business in the market beyond reasonable levels not commensurate with his financial soundness.

(5) Compliance With Statutory Requirements : A stock-broker shall abide by all the provisions of the Act and the rules, regulations issued by the Government, the Board and the stock exchange from time to time as may be applicable to him. B. DUTY TO THE INVESTOR (1) Execution Of Orders : A stock-broker, in his dealings with the clients and the general investing public, shall faithfully execute the orders for buying and selling of securities at the best available market price and not refuse to deal with a Small Investor merely on the ground of the volume of business involved.. A stock-broker shall promptly inform his client about the execution or non-execution of an order, and make prompt payment in respect of securities sold and arrange for prompt delivery of securities purchased by clients.

(2) Issue Of Contract Note : A stock-broker shall issue without delay to his client a contract note for all transactions in the form specified by the stock exchange.

(3) Breach Of Trust : A stock-broker shall not disclose or discuss with any other person or make improper use of the details of personal investments and other information of a confidential nature of the client which he comes to know in his business relationship.

(4) Business And Commission :

  
(a) A stock-broker shall not encourage sales or purchases of securities with the sole object of generating brokerage or commission. 
(b)A stock-broker shall not furnish false or misleading quotations or give any other false or misleading advice or information to the clients with a view of inducing him to do business in particular securities and enabling himself to earn brokerage or commission thereby.
(5) Business Of Defaulting Clients : A stock-broker shall not deal or transact business knowingly, directly or indirectly or execute an order for a client who has failed to carry out his commitments in relation to securities with another stock-broker.
(6) Fairness To Clients : A stock-broker, when dealing with a client, shall disclose whether he is acting as a principal or as an agent and shall ensure at the same time, that no conflict of interest arises between him and the client. In the event of a conflict of interest, he shall inform the client accordingly and shall not seek to gain a direct or indirect personal advantage from the situation and shall not consider clients' interest inferior to his own.

(7) Investment Advice : A stock-broker shall not make a recommendation to any client who might be expected to rely thereon to acquire, dispose of, retain any securities unless he has reasonable grounds for believing that the recommendation is suitable for such a client upon the basis of the facts, if disclosed by such a client as to his own security holdings, financial situation and objectives of such investment. The stock-broker should seek such information from clients, wherever he feels it is appropriate to do so.

(8) Competence Of Stock Broker : A stock-broker should have adequately trained staff and arrangements to render fair, prompt and competent services to his clients. C. STOCK-BROKERS VIS-A-VIS OTHER STOCK-BROKERS (1) Conduct Of Dealings : A stock-broker shall co-operate with the other contracting party in comparing unmatched transactions. A stock-broker shall not knowingly and wilfully deliver documents which constitute bad delivery and shall co-operate with other contracting party for prompt replacement of documents which are declared as bad delivery.

(2) Protection Of Clients Interests : A stock-broker shall extend fullest co-operation to other stock-brokers in protecting the interests of his clients regarding their rights to dividends, bonus shares, right shares and any other right related to such securities.

(3) Transactions With Stock-Brokers : A stock-broker shall carry out his transactions with other stock-brokers and shall comply with his obligations in completing the settlement of transactions with them.

(4) Advertisement And Publicity : A stock-broker shall not advertise his business publicly unless permitted by the stock exchange.

(5) Inducement Of Clients : A stock-broker shall not resort to unfair means of inducing clients from other stock- brokers.

(6) False Or Misleading Returns : A stock-broker shall not neglect or fail or refuse to submit the required returns and not make any false or misleading statement on any returns required to be submitted to the Board and the
Jeshma Mohandas KP
Advocate, Kozhikode
567 Answers
1 Consultations
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