“It is established that the noticee failed to segregate client’s funds inter-se and/ or between clients’ funds and its own funds, misutilised the funds of clients, pledged the securities of clients other than the respective client obligation, funding the clients by allowing exposure beyond the prescribed time frame as specified in the regulations, failed to settle client accounts…,” Sebi said.
The noticee is Anugrah Stock and Broking.
Sebi found that the broker had misused credit clients’ funds to meet the obligations of debit balance clients and the amount of misutilisation ranged between Rs 8.05 crore and Rs 118.77 crore for the selected sample days.
In addition, the broker misutilised clients’ funds and securities by pledging of securities other than the respective clients’ obligations and also failed to settle the clients’ accounts.
According to Sebi, there were 16 instances of incorrect reporting amounting to Rs 71.86 crore.
In violation of norms, the broker also allowed exposure to the debit balance clients and earned interest on debit balance.
Besides, it failed to act with due skill, care and diligence while conducting the client registration KYC and account opening process, as per the regulator.
The investigation concluded that the broker violated provisions of Securities Contracts (Regulation) Act, broker regulation, Sebi circulars, exchange circulars and depository instructions, among others, and consequently imposed a fine of Rs 90 lakh on the broker.
Separately, Sebi restrained Purva Shareregistry (India) Pvt Ltd from onboarding new clients for one month. The entity was found to have violated norms pertaining to maintenance of specimen signatures in relation to processing requests for dematerialisation, rematerialisation, transmission, transfer and issue of duplicate share certificate.
In another order, the regulator said that KCGP Share Broking Services Pvt Ltd should be careful and diligent in the maintenance of records pertaining to its stock broking activity, comply with all the statutory provisions and ensure all assistance to any Sebi inspection that may be conducted in the future.
