The Securities and Exchange Board of India (SEBI) has taken significant action by cancelling the registrations of 39 stock brokers, seven commodity brokers, and 22 depository participants. This decision, announced on 30 August 2024, results from these entities failing to meet essential compliance requirements, thereby posing a potential risk to investors, as detailed in a PTI report.
SEBI’s primary aim in revoking these registrations is to prevent any misuse of their status, particularly as these brokers are no longer active members of recognised stock exchanges or affiliated with depositories. The regulator stated, “This move aims to protect unsuspecting investors,” emphasising the importance of maintaining a secure trading environment.
Despite the cancellations, the affected entities remain accountable for their past actions and must settle any outstanding dues to SEBI. They are also required to preserve records, address investor grievances, and ensure the continuity of services to their clients. SEBI noted that these brokers were initially granted registration under the condition that they would maintain membership in a recognised stock exchange, a requirement they no longer fulfil.
Among the stock brokers whose registrations have been cancelled are Bezel Stock Brokers, Reflection Investments, and Quantum Global Securities. The list also includes other firms such as Aanya Commodities and Destiny Securities. The seven commodity brokers affected include Wealth Mantra Commodities and Sumpoorna Comtrade.
In addition to the brokers, SEBI has also cancelled the registrations of 22 depository participants, which are entities that facilitate the holding and transfer of securities in electronic form. These participants were found to have terminated their agreements with depositories, thus failing to meet the criteria set out under the Depository Participants Regulations of 2018.
A stockbroker, also known as a broker, is a financial market representative who operates in securities. Their primary job role involves obtaining purchase and sale orders and executing the same. Market participants or investors rely on their expertise and knowledge regarding market dynamics to invest in stocks and other investment options.
What are the functions of stock brokers?
Stockbrokers offer a range of essential services to their clients, including providing informed advice on buying and selling stocks and other securities based on thorough market research. They handle transactions and related paperwork, maintain detailed records of all activities, and manage clients’ investment portfolios with regular updates and responses to inquiries. Additionally, they keep clients informed about new investment opportunities and assist in adjusting investment strategies in response to changing market conditions.
Vijay Kedia, Founder and Managing Director at Kedia Capital Services, has cautioned investors who may have a Demat account with any of the banned brokers, urging them to proceed with caution. He stated, “SEBI has banned these 39 stock brokers. If you have a Demat account with any of these, be cautious!”
The list of cancelled registrations includes:-
1. Bezel Stock Brokers Private Limited
2. Reflection Investments
3. Action Financial Services (India) Ltd
4. Sumpoorna Portfolio Limited
5. Vineet Securities Pvt Ltd
6. Quantum Global Securities Limited
7. Wellindia Securities Limited
8. Vrise Securities Private Limited
9. Credential Stock Brokers Ltd
10. Aanya Commodities Pvt Ltd
11. Amber Solutions Pvt Ltd
12. Arcadia Share & Stock Brokers Private Limited
13. C.M. Goenka Stock Brokers Pvt Ltd
14. Destiny Securities Ltd
15. Bhavesh Dhirajlal Stock Broking Co Ltd
16. Enrich Fin & Securities Ltd
17. First Futures and Stocks Private Limited
18. Ganga Yamuna Finvest Private Limited
19. Gems Equities & Securities Pvt Ltd
20. Indovision Securities Limited
21. Olympia Securities Limited (Investnet Securities India Ltd)
22. Century Consultants Ltd
24. Micro Forex Equity & Derivatives Private Limited
25. Moneyflo Securities Private Limited
26. Mousumi Deb Roy (Goodluck Securities)
27. Orient Capital Markets Pvt Ltd
28. Orion Capital and Debt Market
29. Parikh & Shah Finvest Pvt Ltd
30. Prem Somani Share Brokers Pvt Ltd
31. Prime Broking Company (I) Limited
32. Rusoday Securities Ltd
34. Star Share & Stock Brokers Ltd
35. Unicon Securities Pvt Ltd (Unickon Securities Pvt Ltd)
36. Wealth Mantra Limited
38. Classic Share & Stock Broking Services Ltd
39. Grovalue Securities Private Limited
The cancellation of registrations is part of SEBI’s ongoing efforts to uphold the integrity of the capital markets and ensure that only compliant entities operate within this space. The regulator has emphasised that all parties involved must take necessary actions regarding any defaults or pending matters, ensuring that investor interests remain protected.
