MUMBAI: India’s capital markets regulator, the Securities and Exchange Board of India (SEBI), has imposed a monetary penalty of ₹11 lakh on Prabhudas Lilladher Pvt Ltd, citing multiple regulatory violations, including misuse of client funds, incorrect margin reporting, and overstated net worth.
The penalty follows a joint inspection conducted by Sebi along with stock exchanges NSE, BSE, and MCX, covering the period April 1, 2021, to October 31, 2022.
Key Violations Unearthed During Inspection
One of the most serious findings from the inspection was that Prabhudas Lilladher misused client funds on three occasions, with the net available balance (G) dipping into the negative, peaking at a shortfall of ₹1.89 crore.
Other regulatory breaches included:
Incorrect reporting of peak ledger balance in cash and cash equivalents.
Lapses in the client registration process.
Errors in weekly enhanced supervision data reporting.
Overstated net worth by ₹31 lakh.
Unauthorised transfer of client securities worth ₹1.30 crore from 91 credit balance accounts to “client unpaid securities accounts”.
Citing these findings, SEBI concluded that the broker had violated provisions of the Securities Contracts (Regulation) Act, SEBI circulars, and Stock Broker regulations, meriting penal action.
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Nuvama Wealth Also Penalised ₹5 Lakh
In a separate order issued on the same day, SEBI levied a ₹5 lakh fine on Mumbai-based Nuvama Wealth and Investment Ltd. The firm was found guilty of:
Incorrect reporting of client funds.
Lapses in cybersecurity compliance.
This order followed another round of joint inspection (April 1, 2022 – November 30, 2023) conducted by SEBI in collaboration with NSE, BSE, MCX, NCDEX, and depositories CDSL and NSDL.
SEBI emphasised the importance of strict regulatory compliance to protect investors and maintain integrity in the capital markets.