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In its order, the regulator observed that in 55 cases, there was a short margin/MTM collection amounting to Rs 33.16 lakh. | Photo: Shutterstock
Capital markets regulator Sebi on Monday imposed a fine of Rs 10 lakh on brokerage firm Anand Rathi Share and Stock Broker for flouting stock broker rules and other norms.
The order came after the Securities and Exchange Board of India (Sebi) conducted a comprehensive inspection of Anand Rathi Share and Stock Broker Ltd (notified), a Sebi registered stock broker of BSE, NSE, MCX and NCDEX, for the April period. 2022 to October 2023.
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Based on the findings of the inspection, the regulator found certain alleged non-compliances with securities dealer regulations and circulars issued by Sebi, NSE and BSE.
In its order, the regulator observed that in 55 cases, there was a short margin/MTM collection amounting to Rs 33.16 lakh.
However, Anand Rathi maintained that there was no margin deficit, they were adequately collecting margins from customers and adhering to regulatory guidelines.
Additionally, no supporting documents are submitted by the brokerage firm, hence the recipient’s claim is not tenable.
As a result, Anand Rathi Share and Stock Broker violated stock broker rules, the regulator said.
During an inspection to check margin collection and reporting, it was observed that the recipient of the notice had imposed penalty for low initial margin collection from customers.
However, no supporting documents were provided by Anand Rathi, thereby violating the rules of the Code of Conduct for Stock Brokers.
The market watchdog also identified that a total of 10 technical issues occurred between April 2022 and October 2023, which were not reported to the Multi Commodity Exchange (MCX) by the brokerage.
In accordance with securities dealer rules, brokers will need to notify exchanges of the technical problem immediately, but no later than 1 hour after the disruption occurs.
Anand Rathi had a legal obligation to respect and comply with the provisions of the circulars/directions issued by Sebi and the stock exchanges, which she failed to do during the inspection period, the regulator added.
In a separate order, the regulator imposed a penalty of Rs 2 lakh on brokerage Nirmal Bang Securities for violating securities dealer regulations.
The order came after the markets watchdog conducted an inspection regarding Nirmal Bang Securities Pvt Ltd, a Sebi-registered stockbroker.
The thematic inspection of the books of accounts and other documents of Nirmal Bang Securities with regard to verification of authorized persons was conducted by the Sebi officials for the period April 2022 to May 2023.
(Only the title and image of this report may have been reworked by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
First publication: September 30, 2024 | 8:05 p.m. STI