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The Securities and Exchange Board of India (Sebi) has imposed a fine of Rs 7 lakh on Reliance Securities for failing to comply with stock broker norms. The company has been given 45 days to pay the penalty, as per an order issued by Sebi.
Sebi conducted an inspection of Reliance Securities, a registered stockbroker, from December 22, 2022, to January 24, 2023, to verify the entity’s compliance with stock broking activities. The inspection revealed that Reliance Securities reported incorrect details in daily margin statements sent to clients on three occasions. Additionally, the ledger balance was wrongly reported in one instance.
In its investigation, Sebi found that Reliance Securities did not comply with risk-based supervision (RBS) guidelines, as data for cash collateral was not captured while reporting the RBS data. Specifically, Reliance Securities declared Rs 16.13 crore to the exchange for total funds available in the bank, but failed to include funds available with clearing members/clearing corporations, which amounted to Rs 312.57 crore.
Furthermore, Sebi noted that the broking firm imposed upfront penalties on a few clients in several instances, which is not allowed under the rules.
Regarding cybersecurity, Sebi noted adverse audit findings on cybersecurity audits for three periods. Reliance Securities failed to provide confirmation of product testing before use and did not designate an officer for cybersecurity, as required by Sebi. The auditor’s reports for the periods April 2021 to September 2021, October 2021 to March 2022, and April 2022 to September 2022 all contained adverse observations.
As a result of these findings, Reliance Securities has been found to have violated stock broking norms, leading to the imposition of a fine of Rs 7 lakh by Sebi.
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