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SC seeks profit and loss accounts of top six stock brokers

The Supreme Court on Tuesday asked for the profit and loss accounts of six top brokers in the Bombay Stock Exchange as the SEBI complained that they were not showing these to the regulator for determining registration fee.

Appearing for SEBI, additional solicitor general Kirit Raval also pointed out that the brokers were not disclosing their accounts to the expert committee set up to determine the validity of the registration fee for brokers.

The direction was given by a three-judge bench comprising Justice B N Kirpal, Justice N Santosh Hegde and Justice Brijesh Kumar while hearing a petition filed by BSE Brokers' Forum challenging the mode of charging of registration fee by SEBI on the ground that it was collected in arbitrary exercise of powers by SEBI.

The brokers asked to give their profit and loss accounts were R R Bohra, S K Javeri, G S Damani, N B Chokshi, U G Nangalia and H S Javeri, all of whom were shown to have a turnover of more than Rs 20 billion in the affidavit of M C Damani, chairman of BSE Brokers' Forum.

Appearing for the forum, senior advocate P Chidambaram contended that SEBI has exceeded its powers by linking the fee to the turnover of a broker for five years post-grant of registration.

"It is like saying your turnover has increased hence I will charge more," Chidambaram said, and added it could not be termed as registration fee but a tax.

"They (SEBI) want to collect more money for some other purpose and according to their own admission to buy properties," he said adding the brokers at present were not paying the registration fee as the matter was sub-judice.

The forum said that the SEBI has already collected Rs 490 million as registration fee from brokers and another Rs 790 million from other intermediaries.

Chidambaram said that this arbitrarily calculated registration fee was an unreasonable restriction put on the brokers, thus, violative of their fundamental right to carry on with their business guaranteed under Article 19(1)(g) of the Constitution.

He said the manner in which the registration fee is loaded against the big brokers, it appeared to be violative of their right to equality as guaranteed under Article 14 of the Constitution.

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