In its order, Sebi said that some of the clients' accounts were settled with a delay and that mandatory quarterly settlement of clients' accounts was not done on various instances
Sebi has slapped a fine of Rs 8 lakh on stock broker India Advantage Securities Pvt Ltd for multiple violations, including failure to segregate clients' money. During an inspection of the broker carried out on October 29-30 and November 2-3 in 2018, Sebi observed certain irregularities with respect to issues like non-segregation and non-settlement of clients' funds and securities.
In its order, Sebi said that some of the clients' accounts were settled with a delay and that mandatory quarterly settlement of clients' accounts was not done on various instances.
Sebi said the broker had utilised overdraft facility on client bank account for three times which should not have been used.
"In my opinion granting exposure to clients beyond T+2+5 days and benefiting from such practice by charging DPC (Delayed Payment Charge) on running debit balances of such clients is a type of funding which cannot be seen as taking place in connection with or incidental to or consequential upon securities business," Adjudicating officer Vijayant Kumar Verma said in the order dated August 11.
'T+2+5' refers to a particular trading day plus two days plus five days.
He also noted that India Advantage Securities (noticee) was found to be allowing and funding exposure of clients beyond the period which is not permitted under the regulatory framework.
"I further note that noticee has earned significant amount of income (Rs 1.13 crore) during FY 2017-18 by way of charging DPC," he added.
For these violations, the watchdog decided to impose a fine of Rs 8 lakh on the broker.
As per the order, the amount of disproportionate gain or unfair advantage made by India Advantage and the loss suffered by the investors, if any, is not quantifiable.
"I also observe that there are no investor complaints on record arising out of failure on the part of the noticee and the noticee has taken corrective steps to address the violations observed during the inspection. I have considered the same as mitigating factors," Verma said in the order.