SEBI disposes of adjudication proceedings against Nuvama Wealth and Investment

The Securities and Exchange Board of India has closed its adjudication proceedings against Nuvama Wealth and Investment Limited without imposing any monetary penalty, according to a December 1 order. The matter arose from an inspection conducted between August 4 and August 10, 2023, during which SEBI reviewed whether the brokerage was maintaining records and systems in line with stock broker 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 maintains rigorous compliance protocols and that some discrepancies resulted from incorrect information provided by clients. The firm told SEBI that it had strengthened its processes, stating it had introduced online onboarding for 95% clients and controls designed to prevent the use of duplicate email addresses or mobile numbers. In assessing the firm’s responses, SEBI rejected Nuvama’s suggestion that the regulator should not “cherry pick” individual instances from the inspection. The adjudicating officer wrote that such an argument was “unacceptable,” adding that “SEBI in its regulatory role has the power 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 is 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.” 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 stated, adding that 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 stated. Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.