Sebi imposes Rs 12 lakh fine on two stock brokers

In separate orders, the regulator also noted that the two stock brokers –Swastika Investmart and J K Securities –had not complied with various provisions including the December 2009 Sebi circular mandating compulsory settlement of clients' running accounts.

As per the circular, for the client who has specifically authorised the stock broker to maintain a running account, the latter should settle the funds and securities mandatorily at least once in a calendar quarter or month depending on the former's preference.

In 2015, Sebi had conducted an inspection of the books of accounts and other records of Swastika Investmart for the period from 2012-13 to 2014-15 to examine whether the stock broker had complied with the circular.

The regulator had conducted a similar inspection with regard to JK Securities in 2014 for the period from 2012-13 to June 2014.

With regard to Swastika Investmart, Sebi said there was a general lackadaisical attitude on the part of the stock broker in complying with the circular with respect to quarterly or monthly settlement of funds and securities of the clients on various occasions. Thereby, it "did not exercise due skill, care and diligence" as required under the regulations in carrying out the business of a stock broker. "The noticee (J K Securities) has not complied with the Sebi circular mandating compulsory settlement of running account," the Securities and Exchange Board of India (Sebi) said. Swastika Investmart and J K Securities have violated the provisions of Sebi circular and the Stock Brokers and Sub- Brokers Regulations, the regulator observed.

Taking into account the repetitive nature of defaults of Swastika Investmart, Sebi imposed a penalty of Rs 8 lakh on it, while it levied a fine Rs 4 lakh on J K Securities.