Markets regulator Sebi has imposed a fine of Rs 5 lakh each on two brokerage firms -- BP Equities and Manubhai Mangaldas Securities -- for failing to settle client accounts, either on a monthly or quarterly basis.
Securities and Exchange Board of India (Sebi) had conducted an inspection regarding quarterly/monthly settlement of funds and securities of the clients between April 2012 to June 2014 and whether corrective steps were taken for the deficiencies in the Internal Audit Report and NSE Inspection Report.
A Sebi probe found that the two brokerage houses had failed to comply with the provisions of quarterly/monthly settlement of funds and securities of clients on various occasions and thereby, did not exercise due care and skill in carrying out the business of the stock brokers.
The regulator, through two circulars in December 2009 and March 2010, mandated all the stock brokers to settle the running accounts of the clients on a monthly/quarterly basis in order to promote transparency.
However, BP Equities and Manubhai Mangaldas Securities failed to comply with these directives and have violated code of conduct of the broker regulations. Accordingly, Sebi has penalised them.
