SEBI Imposes ₹7 Lakh Penalty On Anand Rathi Share And Stock Broker Limited For Trading Terminal Compliance Failures

SEBI's inspection revealed that the trading terminals were not at the locations reported to the exchanges by the stockbroker. The terminal allocated to authorised person Rathi Sharad Shankarlal was found to be operated from the UK while terminals for Suyog Securities Pvt Ltd were located at addresses different from those reported to the exchange.

In its adjudication order, SEBI noted that Anand Rathi Share and Stock Broker Limited didn't conducted a proper inspection of its authorised persons. The inspection showed discrepancies in the locations of trading terminals and inadequate systems for recording order placements..

According to 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 they report 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 mandate this compliance.

According to Clause 7(e) of Annexure 1 of SEBI Circular no. MIRSD/DR-1/Cir-16/09 dated November 06, 2009, and SEBI Master Circular No. SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/71 dated May 17, 2023, as well as Clause 2 and 6 of Annexure A of NSE Exchange circular no. NSE/INSP/42448 dated October 18, 2019, trading members are required to conduct thorough inspections of their authorized persons.

Anand Rathi Share and Stock Broker Limited contested these findings and argued that trades executed by Rathi Sharad Shankarlal were for family members and did not involve misuse of funds. The broker also argued that corrective actions were taken regarding the locations of terminals.

SEBI considered these arguments but found that the violations persisted and were significant enough to warrant a penalty.