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Informist, Monday, Jun. 9, 2025

--SEBI fines Motilal Oswal Fincl Svcs INR 300,000 for breach of norms

--Motilal Oswal Fincl was lax in control over authorised persons, says SEBI

NEW DELHI – The Securities and Exchange Board of India has imposed a penalty of INR 300,000 on brokerage firm Motilal Oswal Financial Services Ltd. for breach of stock brokers regulations and regulatory circulars, and non-compliance with the same. SEBI issued an adjudication order in this regard Monday.

The markets regulator had carried out a thematic inspection of the brokerage in March 2024 on control over authorised persons. Motilal Oswal Financial Services is a member of the National Stock Exchange of India Ltd. and BSE Ltd.

During the thematic inspection of the brokerage, SEBI found violations of a few norms and issued a show-cause notice to the firm in August, detailing specific alleged violations.

Authorised persons are similar to sub-brokers as market intermediaries, a category which SEBI had discontinued in 2018. They have to be registered with the main broker and the stock exchange and can get and manage clients for the main broker. But under SEBI's regulations, the final responsibility for the authorised persons and their clients remained with the main broker.

Of around five SEBI findings of alleged breach of regulations by Motilal Oswal Financial, the most egregious one pertained to some authorised person indulging in financial dealings with their clients which were not related to trading. In one case, SEBI found the authorised person of Motilal Oswal Financial to have entered into a loan agreement between itself and a few clients, and other agreements for transacting in unlisted shares.

According to SEBI, Motilal Oswal Financial had failed to identify that the authorised person accepted funds in its bank accounts from the clients as per the loan agreement. In another authorised person's case, SEBI found it had "fund based relationship with 36 registered clients wherein" INR 183 million were received and INR 12 million were paid, according to details in SEBI's order.

SEBI decided to impose a lower amount as the penalty because the brokerage firm had taken corrective action post the markets regulator's inspection and as "no complaint against Noticee (Motilal Oswal Financial) has been brought on record."

On Monday, shares of Motilal Oswal Financial ended 2.7% up at INR 893.70 on the National Stock Exchange.  End

Reported by Rajesh Gajra

Edited by Tanima Banerjee

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