Authority: Securities and Exchange Board of India (Quasi-Judicial Authority)
Order Date: June 30, 2026
Case Overview
The matter emanates from a comprehensive inspection of Reliance Securities Limited (now IndusInd Securities Limited) conducted jointly by SEBI and stock exchanges from November 29, 2022 to December 08, 2022. The inspection covered the period from April 01, 2021 to November 30, 2022 and identified multiple alleged violations of SEBI regulations and circulars.
SEBI initiated enquiry proceedings on September 22, 2023 by appointing a Designated Authority (DA). The DA issued a pre-enquiry show cause notice on April 22, 2024, and after considering the Noticee's responses and personal hearing submissions, submitted an Enquiry Report on April 03, 2025 recommending regulatory censure.
The principal allegations included 15 categories of violations:
1. Non-settlement of client funds: ₹24.92 lakh for 122 instances (Apr-Jun 2021) and ₹28.52 crore for 10,102 instances (Sep 2021 onwards)
2. Stock mismatch in 6 instances involving PRO accounts and SLBM transactions
3. Incorrect margin reporting of ₹93,262 for three client codes
4. Margin Trading Funding violations: 19 instances exceeding 50% of net worth limit and 20 instances exceeding client exposure limits
5. Failure to maintain proper evidence of client order placement for 10 trade instances
6. Delayed resolution of 82 investor complaints beyond 30 days
7. Failure to update investor charter website with current complaints data
8. Incorrect reporting of enhanced supervision data on multiple dates in 2021-2022
9. Incorrect reporting of client cash balances in 5 instances ranging from ₹1 lakh to ₹54 crore
10. Underreporting of ₹312.57 crore in Risk Based Supervision data
11. Engaging in non-securities business by providing ₹14 crore in loans to group companies
12. Improper passing of margin penalty of ₹2.86 lakh to 5 clients
13. Incorrect daily margin statements totaling ₹1.87 crore and ledger balance error of ₹3.11 crore
14. Cyber security violations regarding STQC certification and designated officer appointment
15. Non-refund of short margin penalty collections
The Noticee submitted extensive responses contesting the allegations, citing technical errors, system issues, and claiming most violations had been rectified. They also highlighted management change in February 2024 and prior payment of ₹7 lakh penalty in a related adjudication order dated December 20, 2024.
Final Outcome
SEBI disposed of the show cause notice without any directions or penalties. The authority considered the Noticee's corrective actions, the prior penalty payment, the change in management, and precedents from Securities Appellate Tribunal decisions taking a lenient view on inspection-based violations. The order acknowledged that while violations were established, no further action was warranted given the circumstances.
Topics: SEBI Enforcement, Broker Compliance, Regulatory Settlement