SEBI Fines SMC Global Securities Rs 1 Lakh, Finds Lapses In Client Order Records And Authorised Person Supervision

New Delhi: The Securities and Exchange Board of India has imposed a Rs 1 lakh penalty on SMC Global Securities for lapses in maintaining client order records and supervising an authorised person.

The action followed a thematic inspection covering January to September 2024. SEBI examined complaints relating to unauthorised trading and the broker’s procedures for recording client orders.

SEBI Flags Missing Order Records

In its order issued on Thursday, the regulator said SMC Global Securities failed to maintain appropriate records showing clients’ instructions before certain orders were placed.

The broker also could not produce relevant records for multiple orders reviewed during the inspection, according to SEBI.

These findings formed part of the regulator’s assessment of whether the firm followed requirements governing client order placement.

The inspection focused on the records available to establish the basis on which trading orders had been executed.

Authorised Person Supervision Found Inadequate

SEBI also identified shortcomings in the broker’s supervision of authorised person Amit Lilhare.

The order cited inadequate monitoring of bank accounts receiving commissions and insufficient verification of client payout requests.

The regulator found a pattern of fixed payouts among clients linked to Lilhare, raising concerns about the effectiveness of the broker’s oversight during the period examined.

161 Clients Showed Fixed Payout Pattern

Of the 343 active clients mapped to Lilhare, 161 displayed the fixed payout pattern, the order said.

These clients’ investments totalled Rs 6.11 crore, while payouts exceeded Rs 1.84 crore during the inspection period.

SEBI cited these figures alongside the supervision deficiencies identified in its review. The findings concerned the broker’s monitoring responsibilities and its handling of the relevant client records.

Rs 1 Lakh Penalty Imposed

SEBI concluded that SMC Global Securities had violated the Stock Brokers Regulations and other applicable market norms.

The firm is a SEBI-registered stock broker and belongs to exchanges including BSE, NSE, MCX and NCDEX.

The penalty addresses the compliance failures detailed in the regulator’s order.