NEW DELHI: Brokerage firm ICICI Securities on Friday settled with markets regulator Sebi a case of alleged violation of stock brokers rules as well as other market norms after paying Rs 80.4 lakh towards settlement fee. The order came after ICICI Securities filed a settlement application in August last year, requesting the regulator for the settlement of the adjudication proceedings under the Sebi’s (Settlement Proceedings) rules.
“…the instant adjudication proceedings initiated against the applicant (ICICI Securities) vide show cause notice dated June 19, 2024, is disposed of in terms of the Settlement Regulations,” Sebi’s chief general manager and adjudicating officer N Hariharan said.
The case stemmed from a joint inspection conducted by Sebi and NSE in September 2023, covering the period from April to May 2023.
The inspection found multiple non-compliances related to margin trading facility (MTF), software issues, and reporting lapses allegedly flouting stock broker rules and other market norms.
Thereafter, Sebi issued a show cause notice (SCN) on June 19, 2024, to the applicant.
Sebi alleged that ICICI Securities had failed to comply with conditions under margin trading facility (MTF) agreed with the clients that in case of unconfirmed pledge securities under MTF, the securities are to be squared off by the applicant on T+1 day.
Further, the SCN alleged that the applicant did not square off unconfirmed pledge securities on T+1 day and kept such securities in Client Unpaid Securities Account/Pool account without any pledge flouting stock brokers rules.
Additionally, Sebi also alleged that the brokerage house transferred securities from current settlement ID to another, thereby avoiding penalties imposed by the National Securities Depository Ltd.
The show cause notice alleged that ICICI Securities has provided incorrect submissions with respect to data relating to unconfirmed pledge securities under MTF.
Pursuant to receipt of the application, the internal committee of Sebi, proposed a settlement amount of Rs 80.46 lakh, which was accepted by the company.
The committee also directed the brokerage firm to report the technical glitch to the exchanges and submit a preliminary incident report along with root cause analysis report.
Thereafter, ICICI Securities filed revised settlement terms, wherein it complied with the technical glitch directive on November 27, 2024. Subsequently, Sebi’s high powered advisory committee also recommended the matter be settled.
After remitting the settlement fee of Rs 80.46 lakh, ICICI Securities settled the case with Sebi.