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| Edited By: dna Correspondent |Source: DNA |Updated: Mar 18, 2018, 03:17 AM IST
The Securities and Exchange Board of India (SEBI) on Thursday barred brokerage Reliance Securities, a unit of Anil Ambani’s Reliance Capital, from accepting new clients for 45 days, as part of its settlement in a case related to violation of regulations.
SEBI also asked Reliance Securities to spend Rs1 crore on investor education and awareness and pay a fine of Rs25 lakh as part of a settlement of the August 2010 inquiry.
"This is bad news. It is not a matter of losing business but of corporate governance and non-compliance," SP Tulsian, an independent investment consultant said. "It creates a wrong image for the company."
The company was under investigation for violations between April 2007 and March 2009, which included the absence of legal documents for office space, excessive tax collection and frequent disruptions in its trading platform.
Reliance Securities is controlled by billionaire Anil Ambani - the 8th richest Indian, according to Forbes. The firm operates under the brand ‘Reliance Money,’ which has 6,233 outlets across India, according to the company's website.
Earlier this year, Sebi had asked Ambani not to invest in publicly listed securities until December 2011, and barred two other group companies from such investments until the end of 2012. Those companies were accused of using money raised through overseas borrowing and foreign bonds to invest in the Indian stock market.
Reliance Securities, however, welcomed the order. The "consent route has been voluntarily adopted to avoid long drawn litigation, legal costs, etc and there would be no impact on existing customers" a spokesperson at Reliance Capital said.
Incidentally, the firm had launched its second investor education program just three days ahead of this consent order.
“We have already covered close to 30,000 people last year and with this second programme, we intend to reach out to 200 cities across India covering around 1.5 lakh investors,” the spokesperson said. Reuters, with DNA Correspondent inputs
