Sebi orders to attach bank, demat account of Anugrah to recover dues

Markets regulator Sebi has ordered the attachment of bank and share and demat holdings of Anugrah Stock and Broking to recover Rs 1.22 crore dues in a case related to violation of market norms.

The recovery proceedings have been initiated against Anugrah Stock and Broking Pvt Ltd after it failed to pay the Rs 1.22 crore, including interest, all costs and expenses, the Securities and Exchange Board of India (Sebi) said in the attachment order on Tuesday.

In its notice, the markets watchdog asked all the banks, depositories and mutual funds not to allow any debit from accounts of Anugrah Stock and Broking. However, credits have been allowed.

Further, the regulator has directed all banks to attach all accounts, including lockers, of the defaulters.

In March 2021, Sebi passed an order and imposed a penalty of Rs 90 lakh on Anugrah Stock and Broking Pvt Ltd for violations of market norms.

The order follows a joint investigation carried out by Sebi, BSE, NSE and Central Depository Services India Ltd (CDSL) between April 2017 and September 2018.

Sebi found that Anugrah Stock and Broking (Broker) had misused credit clients' funds to meet the obligations of debit balance clients and the amount of misutilisation ranged between Rs 8.05 crore and Rs 118.77 crore for the selected sample days.

In addition, the broker misutilised clients' funds and securities by pledging securities other than the respective clients' obligations and also failed to settle the clients' accounts.

According to Sebi, there were 16 instances of incorrect reporting amounting to Rs 71.86 crore.

In violation of norms, the broker also allowed exposure to the debit balance clients and earned interest on the debit balance.

Besides, it failed to act with due skill, care and diligence while conducting the client registration KYC and account opening process, as per the regulator.

The investigation concluded that the broker violated provisions of the Securities Contracts (Regulation) Act, broker regulation, Sebi circulars, exchange circulars and depository instructions, among others, and consequently imposed a fine of Rs 90 lakh on the broker.