Mumbai: The Securities and Exchange Board of India (SEBI) has imposed a penalty of Rs 10 lakh on Axis Securities for violating stockbroker rules and other regulatory norms. The brokerage firm has been directed to pay the fine within 45 days, as per an order issued by the regulator.
The SEBI’s 82-page order highlights multiple lapses in the operations of Axis Securities, having found that the brokerage firm failed to follow proper procedures in various areas, including reporting discrepancies and handling client funds.
It noted that Axis Securities had inconsistencies in its enhanced supervision reports submitted to stock exchanges. Additionally, there was a mismatch between stock statements and actual holdings in depository accounts, the regulator said.
Another key violation involved the improper settlement of clients’ funds and securities. The SEBI observed that Axis Securities did not settle them as per the preferences given by clients.
The brokerage also failed to provide retention statements with account details. The SEBI further pointed out that Axis Securities passed on penalties imposed by stock exchanges to its clients.
These penalties were related to the short collection of upfront and non-upfront margins. Additionally, the firm transferred securities of clients with credit balances to a “client unpaid securities account” instead of following proper procedures.
The order also mentioned discrepancies in the brokerage’s reporting of politically exposed persons and margin trading exposure. The SEBI found that one of its clients exceeded the allowable margin limit, resulting in a shortfall in margin collection. The market regulator’s action came after an inspection of Axis Securities for the period between April 2021 and November 2022.
Following the findings, the SEBI decided to impose a penalty of Rs 10 lakh on the brokerage firm. Meanwhile, SEBI Chairperson Madhabi Puri Buch on February 21 said that there is no reason to put a cap on the thematic schemes and that something should rather be done to curb the root cause of such proliferation.
“The root cause of the proliferation of thematic mutual fund schemes is the arbitrage between normal schemes and new fund offers,” she said.