The Securities and Exchange Board of India (SEBI) has imposed a ₹7 lakh fine on Anand Rathi Share and Stock Broker Limited for failing to properly inspect the trading terminals of its authorized persons.
SEBI’s inspection uncovered that the trading terminals were not located as reported to the exchanges by the stockbroker. Specifically, the terminal assigned to authorized person Rathi Sharad Shankarlal was found to be operated from the UK, and terminals for Suyog Securities Pvt Ltd were located at addresses different from those reported to the exchange.
SEBI’s adjudication order highlighted that Anand Rathi Share and Stock Broker Limited had not conducted adequate inspections of its authorized persons. The inspection revealed discrepancies in the locations of trading terminals and insufficient systems for recording order placements.
Under NSE Exchange circular no. NSE/MEMB/7400 dated April 20, 2006, and Clause a) of “Trading terminals” in NSE Exchange circular no. NSE/MA/22732 dated February 13, 2013, trading members are required to maintain their trading terminals at the locations reported to the exchange. Additionally, Regulation 9(b) and Clause A(5) of the Code of Conduct for Stock Brokers under Schedule II of SEBI (Stock Brokers) Regulations, 1992, also mandate this compliance.
Further, Clause 7(e) of Annexure 1 of SEBI Circular no. MIRSD/DR-1/Cir-16/09 dated November 06, 2009, SEBI Master Circular No. SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/71 dated May 17, 2023, and Clause 2 and 6 of Annexure A of NSE Exchange circular no. NSE/INSP/42448 dated October 18, 2019, require trading members to conduct thorough inspections of their authorized persons.
Anand Rathi Share and Stock Broker Limited contested the findings, arguing that trades executed by Rathi Sharad Shankarlal were for family members and did not involve misuse of funds. The broker also claimed that corrective measures had been taken regarding the locations of the terminals.
Despite these arguments, SEBI found the violations to be significant and issued a penalty accordingly.
Posted and reproduced in Public Interest by
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