SEBI Fines Reliance Securities ₹9 Lakh for Regulatory Violations

Reliance Securities has been fined ₹9 lakh by the capital markets regulator, SEBI, for violating market regulations and stockbroker norms. The penalty follows a thematic inspection conducted by SEBI and exchanges NSE and BSE, which reviewed the company’s books of accounts, records, and documents from April 2022 to December 2023.

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The inspection aimed to evaluate whether Reliance Securities Ltd (RSL), a SEBI-registered stockbroker, adhered to regulatory requirements, including stockbroker rules, NSEIL Capital Market (CM) regulations, and NSE Future & Options (FO) norms. Based on the findings, SEBI issued a show-cause notice to RSL on August 23, 2024.

In its 47-page order, SEBI highlighted numerous violations by RSL and its authorized persons (APs). These included inadequate systems for recording client orders, discrepancies in terminal usage, and failure to segregate office spaces shared with other brokers. Additionally, SEBI found that offline client order records linked to specific APs, Jitendra Kambad and Naitik Shah, were not properly maintained.

SEBI mandates brokers to retain verifiable evidence of client orders to prevent unauthorized trading and ensure transparency. While RSL acknowledged certain lapses and claimed to have taken corrective actions, such as deactivating unapproved terminals and strengthening internal controls, SEBI deemed these measures insufficient to offset prior violations.

Other findings included unauthorized personnel operating trading terminals and the sharing of office premises and infrastructure between RSL’s APs and those of other brokers, violating segregation rules. This lack of oversight enabled unauthorized activities, such as accepting payments for non-broking purposes.

Although RSL argued that some discrepancies were unintentional and that remedial measures had been implemented, SEBI rejected these claims. The regulator emphasized that compliance must be maintained at all times and that corrective steps post-inspection do not excuse earlier breaches. Consequently, SEBI concluded that RSL had violated NSEL CM regulations, stockbroker rules, and NSEL FO norms.