The Securities and Exchange Board of India (Sebi) has imposed a penalty of Rs 10 lakh on Axis Securities for violations of stock broker regulations and other regulatory standards. The brokerage firm is required to pay the fine within 45 days, as stated by the regulator in an order issued on Friday.
In an 82-page order, Sebi determined that Axis Securities failed to adhere to regulatory requirements in several areas, including reporting discrepancies and improper management of client funds. The regulator identified inconsistencies in the firm’s enhanced supervision reporting to stock exchanges and in stock statements compared to actual holdings in depository accounts.
Sebi also noted that Axis Securities did not settle clients’ funds and securities according to the preferences of the clients and failed to provide retention statements with detailed account information. Moreover, the brokerage transferred penalties imposed by stock exchanges on it for short collection of upfront/non-upfront margins to its clients.
The regulatory body discovered that Axis Securities had transferred securities of clients with credit balances to a “client unpaid securities account” and had inadequately addressed customer grievances. Additionally, Sebi found issues with the reporting of politically exposed persons, improper handling of margin trading exposure that exceeded allowable limits, and shortfalls in margin collection from one client.
The penalty followed Sebi’s inspection of Axis Securities covering the period from April 2021 to November 2022.
