Markets regulator Sebi on Monday imposed a penalty of ₹7 lakh on Reliance Securities for non-compliance with the stock brokers’ norms.
It has been directed to pay the fine within 45 days, according to an order issued by Sebi.
The direction came after the Securities and Exchange Board of India (Sebi) conducted an inspection of Reliance Securities, a registered stockbroker, from December 22, 2022, to January 24, 2023, to verify whether the entity compiled the stock broking activities.
In its probe, Sebi found that Reliance Securities reported incorrect details in daily margin statements sent to clients in three instances. Further, the ledger balance was wrongly reported in one instance.
Additionally, the regulator noted that Reliance Securities did not comply with risk-based supervision (RBS) guidelines as data for cash collateral was not captured while reporting the RBS data.
“In RBS, Noticee (Reliance Securities) declared ₹16.13 crore to the exchange for total funds available in the bank (all client bank accounts, including the settlement account)/ with clearing members (CM)/clearing corporations (CC) as on the last day of the assessment period. Whereas on verification, it was observed that Noticee has not included Funds available with CC / CM which amounts to ₹312.57 crore,” Sebi noted.
The regulator noted that the broking firm passed upfront penalties to a few clients in many instances. Under the rules, members shall not pass a penalty for short collection of upfront margin to clients under any circumstances.
With regard to cyber security, Sebi noted adverse audit findings on cybersecurity audits for three periods. Reliance Securities failed to provide confirmation of product testing before use, did not designate an officer for cybersecurity, as required by Sebi.
“For the period April 2021 to September 2021, October 01, 2021 to March 31, 2022 and April 2022 to September 2022, it is observed that there was one adverse observation by the auditors in all the audit reports,” Sebi said.
Through such activities, Reliance Securities violated stock broking norms and according to the regulator levied a fine of ₹7 lakh on it.
