Capital markets regulator SEBI has levied a fine of Rs 11 lakh on Prabhudas Lilladher after finding the financial services firm in violation of several regulatory provisions, including misuse of client funds and incorrect margin reporting. The order came after the Securities and Exchange Board of India along with the exchanges NSE, BSE and MCX carried out a comprehensive joint inspection of Prabhudas Lilladher Pvt Ltd.
The inspection period was from April 1, 2021, to Oct. 31, 2022.
One of the major findings was the alleged misuse of client funds on three occasions, where the net available balance (G) was negative, peaking at a shortfall of Rs 1.89 crore, thereby violating breach of market norms, the regulator said in the order on Wednesday.
Further, violations included incorrect reporting of peak ledger balance in cash & cash equivalent, client registration process, and analysis of weekly enhanced supervision data, as per the order.
Additionally, SEBI also found that the broker (Prabhudas Lilladher) had transferred securities worth Rs 1.30 crore of 91 credit balance clients to 'client unpaid securities accounts' and overstated its net worth by Rs 31 lakh.
Accordingly, the markets watchdog concluded that the violations were established and imposed a penalty of Rs 11 lakh for violating Stockbrokers rules, Securities Contracts (Regulation) Act, and Sebi circulars.
In a separate order passed on Wednesday, the regulator slapped a fine of Rs 5 lakh on Mumbai-based Nuvama Wealth and Investment for violations of various regulatory provisions, including incorrect reporting of client funds, and lapses in cybersecurity compliance.
The order came after Sebi carried out joint inspection of Nuvama Wealth and Investment Ltd, along with exchanges (NSE, BSE, MCX and NCDEX) and depositories (CDSL and NSDL).
The period covered under the inspection was from April 1, 2022, to Nov. 30, 2023.
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