Sebi’s tough stance: Rs 7 lakh fine on Motilal Oswal signals zero tolerance for violations
In its probe, the regulator found that Motilal Oswal Financial Services did not resolve 26 complaints within a period of 30 days
Markets regulator Sebi on Thursday imposed a penalty of Rs 7 lakh on Motilal Oswal Financial Services Ltd for flouting stock broker and depository participant rules.
Payment Directive
It has been directed to pay the fine within 45 days, according to an order passed by the Securities and Exchange Board of India (Sebi). This came after Sebi conducted inspection of the stock broker and depository participant, Motilal Oswal Financial Services Ltd, jointly with stock exchanges and depositories for the inspection period from April 2021 to June 2022.
Findings of the Probe
In its probe, the regulator found that Motilal Oswal Financial Services did not resolve 26 complaints within a period of 30 days, transferred securities of credit balance clients to "client unpaid securities account", and incorrectly reported Margin Trading Funding (MTF) collaterals to the exchange.
Reporting and Margin Issues
Additionally, it had done wrong reporting and short collection of margin on one instance in CM (capital market) segment, on one instance in FO (futures & options) segment and on five instances in currency derivative segment. Additionally, it had done wrong reporting and short collection of margin on one instance in CM (capital market) segment, on one instance in FO (futures & options) segment and on five instances in currency derivative segment.
Client Fund Management
The regulator noted that 39 clients had traded in June 2022 but these clients were considered as inactive by the broker and their funds were parked aside as on June 2022.
"I find that the allegation that the Noticee (Motilal Oswal Financial Services) while setting aside funds of Rs 3.50 crore belonging to 39 active clients, has shown incorrect reasons viz. non-availability of client's bank account and non-traceability of client, stands established," Sebi Adjudicating Officer Amar Navlani said.
Compliance Requirements
The regulator said the "Noticee being a Sebi-registered stock broker and depository participant was required to comply with the applicable provisions of securities laws, which it had failed to comply with... Such failure and non-compliances accordingly needs to be dealt with suitable penalty". Accordingly, Sebi imposed a penalty of Rs 7 lakh on Motilal Oswal Financial Services.
(Except for the headline, nothing has been changed by All India News Network in the PTI copy.)
