Sebi closes probe against Nuvama Wealth without imposing any penalty

Sebi Closes Adjudication Proceedings Against Nuvama Wealth and Investment

The Securities and Exchange Board (Sebi) has formally 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, which revealed several alleged lapses, including issues with the delivery of physical and electronic contract notes, missing email bounce logs, and deficiencies in client contact details, consent forms, and KYC documentation.

Allegations and Contested Points

• Issues with the delivery of physical and electronic contract notes
• Missing email bounce logs
• Deficiencies in client contact details, consent forms, and KYC documentation
• One client was flagged for trading exposure that appeared inconsistent with income details filed with the exchange

Nuvama Wealth and Investment contested the allegations, arguing that it maintained all compliance protocols and that some discrepancies resulted from incorrect information provided by the clients.

Sebi's Order

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.

The order also 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.”

Key Points from the Order

• The lapses were not severe enough to trigger the penalty framework under Section 15HB of the Sebi Act.
• The order rejected Nuvama's argument that the regulator has “cherry picked” individual instances from inspections.
• The matter did not involve allegations of fraud, and the lapses did not cause investor harm or result in any measurable benefit to the firm.
• The available record did not indicate “disproportionate gains/unfair advantage” or “loss, if any, suffered by the investors.”

Nuvama Wealth and Investment did not respond to the development.