Sebi Issues Fines against Brokers for Non-Adherence to Complaints Procedures -$31,000

The main securities regulator in Asia's 2nd most populous nation, India, was getting heavy handed with firms failing to comply

Participants in India’s vast financial markets sphere were reminded about adherence to compliance procedures, the regulator showing its disarray of non-compliance by issuing monetary fines. The Securities Exchange Board of India (Sebi) has fined seven financial services firm a total of $31,000 for falling short in their compliance practises. The move highlights the regulator’s commitment to safeguarding investors and maintaining India’s financial landscape as a well-regulated market.

The country’s market regulator, Sebi, imposed the fines on seven firms for failing to register with its online complaint system within the time limit and for not resolving complaints, it stated in a notification.

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The firms in question had not obtained the registration with the authority’s online investor redressal system, SCORES, within the stipulated time. Sebi addresses various types of complaints from investors, taking up complaints related to issue and transfer of securities and non-payment of dividends with listed companies. In addition, Sebi also takes up complaints against the various intermediaries registered with it as well as related issues.

Sebi issued separate orders against Bowreah Cotton Mills Company, G R Magnets, Asia Pacific Financial Services, 5 S Ltd, Micro Accessories India, Bharatpur Nutritional Products and Sarla Credit Securities.

The SCORES initiative was launched in 2011, and financial services participants and listed companies had to register themselves by September 2012, failure to register would result in enforcement action.

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SCORES provides a centralised database of all complaints, online movement of complaints to the concerned listed companies and online upload of Action Taken Reports (ATRs) by the concerned companies. Users can track the status of their complaints, furthermore, the system creates a new layer of transparency as details of pending complaints are published on the site.

In the Order, Sebi stated that the firms, except for Sarla Credit and Securities, had also been penalised for not resolving investor grievances pending against them, despite having been reminded by the watchdog.

India’s electronification of its financial trading landscape has been a key driver behind the growth of the industry. Its revolutionary commodities trading exchange, MCX, in 2003, was the stepping stone for future developments in the country.

Sebi’s CEO, UK Sinha, recently spoke about commission payments to agents in the sales cycle of mutual funds, informing conference attendees that the process needed refinement and any payments needed to have a logical step.

Indian financial markets have been plagued by a recent scandal affecting its spot exchange, the pandemic has spread across other entities as authorities look at the root cause of the issue.

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