Brokerage company Angel Broking Ltd has been fined Rs 10 lakh by capital markets regulator SEBI for allegedly breaking regulatory rules. A registered stock and commodities broker with SEBI is Angel Broking Ltd (now doing business as Angel One Ltd). The company is listed on the BSE and NSE bourses.
The order was issued after a thorough joint examination of Angel Broking Ltd.'s (ABL) operations by SEBI, the stock exchanges, and the depositories.
The inspection took place between April 2019 and December 2020. The markets watchdog started adjudication procedures against ABL based on the inspection's findings.
In its 78-page judgement, SEBI determined that ABL misappropriated Rs 32.97 crore by pledging the securities of customers who had a credit balance in their ledger.
The regulator also noted that the noticee (ABL) failed to actually settle the payments of inactive customers 300 times throughout the inspection period, for a total of Rs 43.96 lakh.
Additionally, 1,081 times—for a total of Rs 16.65 lakh—ABL did not actually settle the funds of clients who had not traded in the previous three months.
ABL broke the regulations by holding onto the value of money and securities to the extent that the value of turnover performed on the date of settlement in the cash market segment after January 2020 was Rs. 10.26 lakh in 85 instances.
In the ruling issued on Friday, SEBI said that the noticee had also neglected to do routine reconciliation between depository participant accounts and back office records, resulting in a total quantity differential of 44.72 lakh having an absolute worth of Rs 1,226.73 crore.
Despite the fact that debit balances were not recovered, the regulator noted that the Noticee had given the client exposure totaling Rs 2.10 crore after T+2+5 days.
The noticee informed the inspection team that the MTM (Mark-to-Market) produced from the derivative segment position was taken into account while giving exposure.
The regulator said that since it did not offer any supporting documentation for its application, it did not adhere to the regulations.
There was a discrepancy in fund balances as per ledger and daily margin statement, it noted, and the ABL had reported false ledger balances for 30,602 customers and a net difference of Rs 340.81 crore to the exchange for the month of October 2020.
According to the guidelines, a stock broker must uphold the highest standards of honesty, use reasonable skill and care, and adhere to legal requirements. ABL did not do any of these things.
ABL violated the broker rules' Code of Conduct as a result of failing to maintain customers' records with the necessary competence and care, it said.