MUMBAI: The Securities and Exchange Board has closed its adjudication proceedings against Nuvama Wealth and Investment without imposing any monetary penalty.
The matter arose from an inspection conducted between August 4 and August 10, 2023, during which Sebi had reviewed whether the brokerage was maintaining records and systems in line with stockbroker regulations. The subsequent show-cause notice pointed to several alleged lapses, including issues in the delivery of physical and electronic contract notes, missing email bounce logs, and deficiencies in client contact details, consent forms, and KYC documentation. One client was also flagged for trading exposure that appeared inconsistent with income details filed with the exchange.
Nuvama contested the allegations, arguing that it maintained all compliance protocols and that some discrepancies resulted from incorrect information provided by the clients. The firm also told Sebi that it had strengthened its processes by introducing online onboarding for 95% clients and controls designed to prevent the use of duplicate email addresses or mobile numbers.
According to an order issued Monday, Sebi said after weighing the circumstances, the adjudicating officer concluded that the violations did not warrant a financial penalty.
“The allegations against the noticee do not warrant any monetary penalty,” the order said, adding the lapses were not so severe as to trigger the penalty framework under Section 15HB of the Sebi Act.
With this finding, the proceedings initiated through the show-cause notice dated April 5, 2024, have been formally disposed of, bringing the regulatory matter to a close, the order said.
However, Sebi rejected Nuvama’s response that the regulator has “cherry picked” individual instances from inspections, saying that argument is “unacceptable,” and that “Sebi and the adjudicating officer have the regulatory role and powers to pick instances wherein compliances were inadequate.”
The order noted that the scale of the broker’s operations could not be used to dilute regulatory expectations, observing, “the volumes handled by the entity are immaterial in this regard.”
At the same time, Sebi acknowledged that the matter did not involve allegations of fraud and that the lapses were not of a nature that caused investor harm or resulted in any measurable benefit to the firm. The order pointed out that the available record did not indicate “disproportionate gains/unfair advantage” or “loss, if any, suffered by the investors.”
Nuvama did not respond to the development.