Context:
In a decisive regulatory move, the Securities and Exchange Board of India (SEBI) has levied a ₹7 lakh penalty on Reliance Securities for multiple violations of stockbroker norms, including failure to settle client funds, inaccurate margin reporting, and inadequate audit trails.
What Triggered the Action?
Following an inspection between December 22, 2022, and January 24, 2023, SEBI uncovered widespread lapses:
- Inactive Client Fund Settlement Ignored:
- In 122 out of 127 cases, client funds were not settled on a quarterly basis.
- Since September 2021, the firm failed to settle funds after 30 days of inactivity in 10,102 instances, affecting 8,527 unique clients.
- Inaccurate Margin Reporting:
- Margins collected were incorrectly reported to exchanges, raising red flags about systemic data integrity.
- Lack of Trade Documentation:
- The broker was unable to furnish valid proof of order placements, violating trade audit and client transparency norms.
- SEBI’s Stand:
- The regulator noted that Reliance Securities’ lapses weren’t isolated but indicative of structural negligence, undermining investor confidence and exposing clients to potential risks.
