Sebi slaps Rs 30 lakh fine on Geojit Financial Services for violations of stock broker norms, non-settlement of clients' accounts
Sebi said Geojit Financial Services had not settled accounts of its inactive clients in seven quarters during the inspection period—FY2013-14 and 2014-15.
Sebi conducted an inspection of the books of accounts of the firm, which was earlier known as Geojit BNP Paribas Financial Services
Sebi found that the broker made a delay of more than 7 months in formulating the anti-money laundering (AML) policy
As part of AML policy, Geojit Financial Services was required to identify beneficial ownership at the time of account opening
New Delhi: Markets watchdog Sebi on Tuesday imposed a fine of Rs 30 lakh on Geojit Financial Services Ltd for various violations of stock broker norms, including non-settlement of clients' accounts.
The regulator had conducted an inspection of the books of accounts and other records of the Geojit Financial Services, which was earlier known as Geojit BNP Paribas Financial Services Ltd.
The inspection period was financial years 2013-14 and 2014-15.
During the inspection, the regulator found that the broker made a delay of more than 7 months in formulating the anti-money laundering (AML) policy whereas it was required to put in place the policy in a month after Sebi issued a circular in January 2006.
Besides, as part of AML policy, it was required to identify beneficial ownership at the time of account opening. However, the broker on four instances failed to do so.
In a 50-page order, Sebi said the entity had not settled accounts of its inactive clients in seven quarters during the inspection period.
"... the total amount not settled during the quarter ranged from approximately Rs 1.50 crore to approximately Rs 2.59 crore and the number of such clients ranged from 1,278 to 1,962," Sebi said.
According to the regulator, the entity was also not settling client accounts with balances less than Rs 1,000 in the seven quarters, where the total amount not settled during the quarter ranged from around Rs 43.87 lakh to Rs 83.06 lakh. The number of such clients ranged from 38,039 to 52,146, it added.
Further, the entity did not file suspicious transactions report to financial intelligence report within the stipulated time.
Moreover, it failed to take adequate steps for redressal of investor grievance within one month of receipt of the complaint as required under Sebi norms.
By doing so, the entity violated various Sebi circulars and code of conduct of stock broker specified under broker regulations.
Sebi said it is "convinced that it is a fit case to impose monetary penalty under... the Broker Regulations".
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