SEBI Imposes Rs 7 Lakh Fine on Reliance Securities for Regulatory Breaches
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Synopsis
On April 7, SEBI fined Reliance Securities Limited Rs 7 lakh for failing to comply with stockbroker regulations. The penalties arose from various violations identified during an inspection, including inaccurate reporting and cybersecurity deficiencies.
Key Takeaways
- SEBI fined Reliance Securities Rs 7 lakh.
- The company provided incorrect daily margin statements.
- It failed to report accurate cash collateral data.
- Upfront margin penalties were incorrectly transferred to clients.
- Cybersecurity protocols were not followed.
Mumbai, April 7 (NationPress) The Securities and Exchange Board of India (SEBI) has levied a fine of Rs 7 lakh on Reliance Securities Limited for breaching stockbroker regulations.
As per SEBI's directive, the firm has a period of 45 days to settle the fine. SEBI carried out an inspection of Reliance Securities, a registered stockbroker, from December 22, 2022, to January 24, 2023.
The investigation aimed to ascertain adherence to stockbroking regulations. During this review, SEBI identified multiple violations.
One significant issue was that Reliance Securities provided inaccurate information in daily margin reports to clients on three separate occasions.
Additionally, the company incorrectly reported ledger balances once, which contradicts the rules designed to promote transparency and equity in stock trading.
SEBI also discovered that the firm did not comply with the risk-based supervision (RBS) guidelines. The reports submitted by Reliance Securities omitted essential cash collateral data, a crucial element of risk management.
For instance, it disclosed Rs 16.13 crore as total funds in banks and clearing members but neglected to mention the actual Rs 312.57 crore available with clearing corporations and clearing members.
Another breach involved upfront margin penalties, which the company erroneously transferred to certain clients, violating SEBI’s regulations.
Moreover, SEBI found deficiencies in cybersecurity. Over three audit periods, the company failed to adhere to proper protocols.
“It did not conduct product tests prior to deployment and failed to appoint a cybersecurity officer, a requirement,” the market regulator stated.
SEBI highlighted that between April 2021 and September 2021, October 2021 and March 2022, and April 2022 and September 2022, there was one negative remark from auditors in each audit report.
These recurring issues indicate that the company did not comply with vital stockbroking and cybersecurity regulations.
“In light of these findings, SEBI has decided to impose a fine of Rs 7 lakh on Reliance Securities for violating its regulations,” the agency concluded.
