Sebi slaps Rs 15 lakh fine on Systematix Shares & Stocks

Markets regulator Sebi today imposed a penalty of Rs 15 lakh on stock broker Systematix Shares & Stocks for failing to segregate funds of clients as well as misusing the money.
Systematix Shares & Stocks (I) Ltd is registered with the Securities and Exchange Board of India (Sebi) and is a trading member of the BSE, the National Stock Exchange of India and Metropolitan Stock Exchange of India.
The regulator's ruling has come following an inspection into the books of Systematix Shares to examine whether the stock broker had complied with the requirements of Sebi circulars with respect to segregation of funds and securities of clients.

"The noticee (Systematix Shares) has failed to maintain segregation of client's funds, incorporating the nomenclature 'client account' in the name of the bank accounts maintained for the funds of the clients with various banks and further misused the clients funds," Sebi said in an order.
As per the order, the stock broker had submitted that it has approximately 12,500 clients and the inspection has brought out 11 instances of intermingling of funds in respect of 3 clients.
"... approximately Rs 62.45 crores of funds have been mis-utilised by the noticee," the regulator said.

Noting that Systematix Shares has failed to maintain high standards of integrity, promptitude, fairness, proper care and skill in the conduct of its business, Sebi said that the stock broker has violated the Broker Regulations, which warrants monetary penalty.

Accordingly, the regulator has imposed a penalty of Rs 15 lakh on Systematix Shares.
In a separate order, Sebi levied a fine of Rs 10 lakh on Oxus Investments for acting as an unregistered portfolio manager.
"The noticee (Oxus Investments), by continuing to carry out the activity of a portfolio manager even after expiry of its certificate of registration, has acted as an unregistered portfolio manager which is in violation of the provisions of... the PM (Portfolio Managers) Regulations warranting imposition of monetary penalty," Sebi said in the order.