Sebi slaps Rs 10 lakh penalty on Axis Securities for violating stock brokers rules

Capital markets regulator Sebi has imposed a penalty of Rs 10 lakh on Axis Securities for flouting stock brokers rules as well as other regulatory norms. The penalty has to be paid by the brokerage firm within 45 days, the regulator said in an order on Friday.

In an 82-page order, Sebi found that Axis Securities failed to follow regulatory procedures in several areas, including reporting discrepancies and improper handling of client funds.

The market regulator found that Axis Securities had inconsistencies in its enhanced supervision reporting to stock exchanges and in stock statements compared to actual holdings in depository accounts.

The Securities and Exchange Board of India (Sebi) also observed that Axis Securities also did not settle clients’ funds and securities as per preference obtained from the clients and also failed to provide retention statements with account details.

Additionally, the brokerage firm passed on penalties imposed by stock exchanges on it for short collection of upfront/non upfront margin to its clients, Sebi said.

The markets watchdog noted that the brokerage firm had transferred securities of clients with credit balances to a “client unpaid securities account” and did not properly address customer grievances.a Further, Sebi found certain discrepancies on part of Axis Securities in the reporting of politically exposed persons and margin trading exposure which exceeded the allowable limit, with a shortfall in margin collection from one client. Accordingly, the regulator had levied a fine of Rs 10 lakh on Axis Securities.

The order came after Sebi had undertaken inspection of Axis Securities for the period from April 2021 to November 2022.