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It has been directed to pay the fine within 45 days, according to the order.
The order came after SEBI along with stock exchanges and depositories conducted an inspection of books of accounts and other records of Anand Rathi Shares and Stock Brokers Ltd, a registered stock broker and depository participant, from November 25, 2021 to December 15, 2021.
The inspection period was from April 1, 2020 to October 31, 2021.
In its probe, SEBI observed that funds of credit balance clients were mis-utilized for meeting the obligations of debit balance clients and/or for its own purpose. The amount of misutilization ranged from ₹22.07 lakh to ₹16.36 crore.Also, the broker had not maintained the daily reconciliation statement during the inspection period, made incorrect reporting of margin collection to the exchange and had not correctly reported the details of financial data (total debit balance of all clients) under Risk Based Supervision to the tune of ₹10 lakh.
Further, the regulator observed that trades were executed without the consent of the client (unauthorized trade) in 28 instances.
“I note that Noticee (Anand Rathi Shares and Stock Brokers), being a Sebi registered intermediary, was required to comply with the extant applicable provisions of laws, which Sebi is duty bound to enforce. The Noticee failed to comply with the provisions of law …and such failure and/or non-compliances accordingly needs to be dealt with suitable penalty,” SEBI Adjudicating Officer Amar Navlani said.
Accordingly, SEBI imposed a penalty of ₹5 lakh on the broker.
