- Securities Exchange Board of India suspended Prabhudas Lilladher from new client activities for 7 days
- Allegations include misuse of client funds, mis-reporting margins, and incorrect reporting practices
- Violations occurred between April 2021 and October 2022, revealed during joint inspection in November 2022
The Securities Exchange Board of India has suspended the brokerage firm, Prabhudas Lilladher Pvt. Ltd. from engaging with new clients, signing new contracts, or launching new schemes for seven days.
The regulator has alleged that the brokerage of misusing client funds, mis-reporting margins, and incorrect reporting.
The move came after the SEBI, along with National Stock Exchange of India, and BSE Ltd. conducted a comprehensive joint inspection at Prabhudas Lilladher from Nov 2, 2022 to Nov 8, 2022.
After analysis, the regulator observed violation with regulation of client funds misuse, trade settlement, incorrect reporting, correction of margin, and other compliance rules.
They found the alleged violations took place in the period: April 01, 21 to Oct 31, 22.
Post finding regulatory compliance violations, SEBI engaged a designated authority to carry out the enquiry in Dec 28, 2023. The DA recommended barring Prabhudas Liladher from taking new contracts, assignments, and launching new schemes for 15 days.
The regulators have also rejected Prabhudas Liladher's claim that the alleged lapses were technical and not intentional.
During the investigation period, no complaints from Prabhudas Liladher's clients were received, which indicated that they are most likely to be unaware of discrepancies, SEBI said in the Enquiry Order.
The regulator also found a violation in delayed in uploading documents to KRA, not correctly uploading details of all clients' funds lying with them on stock exchange system, incorrect reporting of exposure given to the clients, and incorrect reporting of Clear Ledger Balance and Peak Ledger Balance in cash and cash equivalent.
Prabhudas Liladher also attracted regulator's scrutini for collecting excessive brokerage from four clients. The brokerage allegedly kept two demat accounts opened beyond due dates.
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