SEBI orders Stockholding Services Limited over 162 client retention statement failures

This is a final order by SEBI regarding Stockholding Services Limited (formerly SHCIL Services Limited), a registered stock broker, concerning compliance violations identified during an inspection conducted between November 2022 and December 2022.

Who it concerns: Stockholding Services Limited (Formerly SHCIL Services Limited)

What SEBI found or ordered

• SEBI found the company failed to generate and send retention statements to clients in 162 instances.
• SEBI found the company retained excess client margins and failed to settle inactive clients as required.
• SEBI found mismatches between back-office records and actual client Demat account holdings, including excess shares in client Demat accounts across 47 ISINs worth Rs. 55.85 Lakhs.
• SEBI found the company failed to retain adequate End of Day (EOD) and Peak Margins in certain instances and incorrectly reported this to the exchange.
• SEBI found the company wrongfully passed on penalties levied by the clearing corporation to clients for short collection of upfront margin.
• SEBI found the company failed to maintain complete and accurate KYC records for clients.
• SEBI found the company failed to appoint a Chief Information Security Officer (CISO) and notify CERT-In as required.
• The Designated Authority recommended a regulatory censure against the company.

Also in the document

• The order is a Final Order issued under Section 12(3) of the SEBI Act, 1992.
• The inspection period covered from April 1, 2021, to October 31, 2022.
• The company attributed many violations to deficiencies in its old back-office software vendor, which was later replaced by Tata Consultancy Services (TCS).
• SEBI absolved the company of charges related to failing to provide data in time to inspecting authorities, considering the circumstances.