SEBI Fines Axis Securities ₹10 Lakh for Regulatory Violations

The Securities and Exchange Board of India (SEBI) has imposed a penalty of ₹10 lakh on Axis Securities for violating stockbroker rules and other regulatory norms. The penalty must be paid within 45 days, according to SEBI’s order. The regulator highlighted multiple operational lapses, citing issues related to reporting discrepancies, client fund handling, and procedural violations.

Key Findings in SEBI’s Order

The SEBI’s 82-page order outlined several violations by Axis Securities. It found inconsistencies in the enhanced supervision reports submitted to stock exchanges, which raised concerns about the brokerage’s compliance framework. Additionally, there was a mismatch between the stock statements provided and the actual holdings in depository accounts.

One of the major violations noted was the improper settlement of client funds and securities. SEBI observed that Axis Securities failed to settle client accounts as per their preferences, leading to potential financial discrepancies. Furthermore, the brokerage firm did not provide retention statements with necessary account details, violating transparency norms.

Another significant issue was the improper transfer of client securities. Instead of following due procedures, Axis Securities moved securities of clients with credit balances to a “client unpaid securities account.” This raised concerns over the firm’s handling of investor assets. Additionally, SEBI pointed out that Axis Securities passed on penalties imposed by stock exchanges to its clients. These penalties were related to short collections of upfront and non-upfront margins.

SEBI’s order also mentioned discrepancies in the brokerage’s reporting of politically exposed persons (PEPs) and margin trading exposure. The regulator found that one of the firm’s clients exceeded the allowable margin limit, leading to a shortfall in margin collection.

SEBI’s Inspection and Regulatory Action

The regulatory action followed an inspection of Axis Securities for the period between April 2021 and November 2022. Based on its findings, SEBI determined that the brokerage firm had violated several key regulations, leading to the imposition of the ₹10 lakh penalty.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.