Sebi Imposes Fine On Anand Rathi Shares And Stock Brokers For Regulatory Violations

Sebi Imposes Fine on Anand Rathi Shares and Stock Brokers for Regulatory Violations

Markets regulator Sebi has imposed a ₹5 lakhs penalty on Anand Rathi Shares and Stock Brokers Ltd. for breaching regulatory norms. The company has been directed to pay the fine within 45 days, according to Sebi’s order issued on Thursday.

The penalty follows an inspection conducted by Sebi, in collaboration with stock exchanges and depositories, on the books of accounts and other records of Anand Rathi Shares and Stock Brokers Ltd., a registered stock broker and depository participant. The inspection covered the period from April 1, 2020, to October 31, 2021, with the inspection itself taking place from November 25, 2021, to December 15, 2021.

Sebi’s investigation revealed several violations, including the misutilization of funds belonging to clients with credit balances. These funds were improperly used to meet obligations of clients with debit balances or for the broker’s own purposes. The amount of misused funds ranged from ₹22.07 lakhs to ₹16.36 crores.

Additionally, the broker failed to maintain daily reconciliation statements during the inspection period, reported incorrect margin collections to the exchange, and did not accurately report the financial data, particularly the total debit balances of all clients, amounting to ₹10 lakhs under Risk-Based Supervision. The investigation also found 28 instances where trades were executed without client consent, amounting to unauthorized trading.

Sebi’s Adjudicating Officer, Amar Navlani, noted that as a Sebi-registered intermediary, Anand Rathi Shares and Stock Brokers Ltd. was obligated to comply with the applicable laws, which Sebi is responsible for enforcing. Navlani stated that the firm’s failure to adhere to these provisions warranted a penalty.

In conclusion, Sebi imposed a ₹5 lakhs fine on the firm for its non-compliance with regulatory norms.