Anil Dhirubhai Ambani Group’s Reliance Securities settled charges of violation of securities code on at least 20 counts, with the market regulator, including clubbing company and clients funds, by agreeing for a monetary penalty and not to add clients for 45 days. This is the second such settlement with the Securities and Exchange Board of India for the Anil Ambani group in less than a year, after Reliance Infrastructure and Reliance Natural Resources were barred from the secondary market till December 2012 in a similar agreement. Then, Ambani and four group officials —Satish Seth, SC Gupta, JP Chalasani and Lalit Jalan — paid a settlement charge of Rs.50 crore. The brokerage has now agreed to pay Rs.25 lakh in fine and commit Rs.1 crore for investor education within six months, without admitting or denying guilt. Reliance Securities, “did not maintain clear segregation between broking and other activities of group companies,” Sebi said in a statement on its website. It “did not inform the various charges to the clients at the time of client registration leading to many investor complaints. It received funds from non-client bank accounts available with it, thus not having a sound thirdparty check for receipts of payments,” the regulator listed as violations. The penalty is a blow to the image of Anil Ambani which is also in the thick of the telecom scandal where mobile phone licences were alleged to have been thrown away to favour a few, causing losses to the treasury. Last August, the regulator had issued a show cause notice under the cease and desist proceedings against Reliance Securities after an inspection for two fiscal years till March 2009 revealed several irregularities. “Even after pointing out in the NSE and BSE inspection reports, applicant did not update its client master with the client details,” Sebi said. Reliance said the settlement was voluntary and customers won’t be affected. “Consent route voluntarily adopted to avoid long-drawn litigation, legal costs,” Reliance Securities said in a statement. RSL “has already announced extensive investor awareness programme to cover Rs.1.5 lakh investors across 200 cities.” Sebi said that Reliance Sec did not have any documentary proof like licence agreement, proof of ownership of office for their Thane branch office, the dealers operating the trading terminals were not their employees, but were the employees of Syntel global. “Reliance Securities was found to be only 50% equipped to handle its then customer base, as observed in the then system audit report, pointing towards inadequate system in place. It issued undated letters to different organisations on many occasions.” The regulator also found that the broking firm took power of attorney in the name of Reliance Commodities from its clients and used to take general power of attorney to debit clients’ bank account, purchase and sale of post office deposits, LIC, GOI bonds etc. – www.economictimes.indiatimes.com
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