Mumbai: The Securities and Exchange Board of India (SEBI) on Monday imposed a fine of Rs 7 lakh on Reliance Securities Limited for not following stockbroker regulations.
About The Case
According to SEBI's order, the company has 45 days to pay the penalty. SEBI conducted an inspection of Reliance Securities, which is a registered stockbroker, between December 22, 2022, and January 24, 2023.
The purpose was to check if the company was following all stockbroking rules properly. During the investigation, SEBI found several violations.
One of the major issues was that Reliance Securities gave incorrect details in daily margin statements to clients on three different occasions.
The company also reported wrong ledger balances once. These mistakes go against the rules that ensure transparency and fairness in stock trading.
SEBI also found that the company failed to follow the risk-based supervision (RBS) guidelines. In its reports, Reliance Securities did not include cash collateral data, which is an important part of risk management.
For example, it showed Rs 16.13 crore as total funds in banks and clearing members, but did not mention the Rs 312.57 crore that was actually available with clearing corporations and clearing members.
Another violation was related to upfront margin penalties. The company wrongly passed on these penalties to some clients, which is not allowed under SEBI’s rules.
In addition, SEBI found problems related to cybersecurity. During three audit periods, the company did not follow proper procedures.
“It failed to test its products before using them and did not appoint a cybersecurity officer, which is mandatory,” the market regulator said.
SEBI pointed out that from April 2021 to September 2021, October 2021 to March 2022, and April 2022 to September 2022, there was one adverse observation by the auditors in each audit report.
These repeated issues show that the company did not comply with important stockbroking and cybersecurity norms.
“Based on these findings, SEBI decided to fine Reliance Securities Rs 7 lakh for violating its rules,” it added.
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