Mumbai, Nov 29 (NationPress) The Securities and Exchange Board of India (SEBI) has prohibited stock broker Prabhudas Lilladher Private Limited from accepting any new assignments for a duration of seven days beginning December 15, 2025.

This measure was taken after SEBI discovered that the firm had breached multiple regulations concerning client funds, margins, reporting, and brokerage.

The directive, issued by SEBI’s Chief General Manager N. Murugan, stipulates that the broker must refrain from entering into any new contracts or launching any new schemes throughout the seven-day ban.

SEBI’s decision follows a joint inspection conducted by SEBI, NSE, BSE, and MCX covering the period from April 1, 2021, to October 31, 2022.

During this investigation, the regulatory body identified that the firm had misappropriated client funds, failed to promptly settle client accounts, inaccurately reported margins and balances, and imposed brokerage fees exceeding the allowed limits.

SEBI dismissed the company's defense that these infractions were trivial or the result of software glitches or clerical mistakes, stating that the violations compromised essential regulations intended to safeguard client funds.

Regarding the misuse of funds, SEBI revealed that on three separate occasions in July 2021, the broker experienced a shortfall of approximately Rs 2.70 crore between the funds it was obligated to hold for clients and the actual balance on hand.

This indicated improper use of client funds. The firm’s assertion that the issue stemmed from COVID-related disruptions and was insignificant compared to the overall business was rejected.

The order also pointed out delays in the return of idle client funds. Balances for 1,283 non-traded clients quarterly, 677 non-traded accounts monthly, and three traded client accounts were not settled within the mandated timelines.

SEBI emphasized that settlements must occur on time, irrespective of whether clients file complaints or the broker rectifies the issue afterward.

The inspection further uncovered discrepancies in reporting end-of-day and peak margins, including a short-collection of peak margins amounting to about Rs 55.46 lakh in one case.

There were also issues concerning misreported client funds and incorrect ledger balances submitted to the exchanges.

Additionally, SEBI found that penalties imposed by clearing corporations for short-collection of margins were passed onto clients and frequently not refunded, despite explicit instructions from the exchanges. This practice contravenes regulatory rules.