SEBI Fines Rs.11 Lakh On Broking Firm Prabhudas Lilladher For Violating Norms
The penalty was slapped under the Securities Contracts (Regulation) Act
The Securities and Exchange Board of India (SEBI) has imposed Rs.11 lakh on financial services firm, Prabhudas Lilladher Pvt Ltd, noting that it violated several regulatory provisions, including misuse of client funds and incorrect margin reporting.
The order came after the market watchdog, along with National Stock Exchange (NSE), Bombay Stock Exchange (BSE) and Multi Commodity Exchange of India (MCX) carried out a joint probe of Prabhudas Lilladher between 1st April 2021 and 31st October 2022.
One of the major findings was the alleged misuse of client funds on three occasions, where the net available balance (G) was negative. It peaked at a shortfall of Rs.1.89 crore, breaching market norms. The violations also included incorrect reporting of peak ledger balance in cash and cash equivalent, client registration process and analysis of weekly enhanced supervision data.
The market regulator observed that the broker transferred securities of Rs.1.30 crore for 91 credit balance clients to ‘client unpaid securities accounts’, overstating its net worth by Rs.31 lakh.
Thus, SEBI imposed the penalty under the Securities Contracts (Regulation) Act, 1956.