Reliance Securities settles SEBI charges with fine
10 Jun 2011
Reliance Securities, the brokerage firm that is part of the Anil Dhirubhai Ambani Group, on Thursday settled charges against it by the Securities & Exchange Board of India by paying a fine and agreeing not to register any new clients for the next 45 days.
The market regulator had charged the company with violating the securities code on some 20 counts, including clubbing of company and client funds, lack of documentary proof for a branch office, collection of excess securities transaction tax, and collecting cheques in the name of group firm Reliance Money.
The company has agreed to pay around Rs25 lakh in fines, and also spend Rs1 crore on customer awareness and investor education programmes within six months. Under the settlement, it is not obliged to admit or deny guilt.
Reliance Securities was being probed for alleged violations of rules for brokerage entities occurred between April 2007 and March 2009. SEBI said that its inspection of the books of Reliance Securities during this period revealed several irregularities.
This is the second such settlement with SEBI for ADAG in less than a year. Earlier, Reliance Infrastructure and Reliance Natural Resources were barred from the secondary market till December 2012 in a similar agreement. The group also paid a settlement charge of Rs50 crore.
According to SEBI, Reliance Securities "did not maintain clear segregation between broking and other activities of group companies", and also did not convey the various charges to its clients at the time of their registration, leading to many investor complaints.
