sebi:Order/SM/KS/2025-26/32079

SEBI · SEBI · 2025-07-11 · Sudeep Mishra, Adjudicating Officer

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Facts / Headnote

Violation established; penalty of Rs. 4,00,000 imposed under Section 15HB

Provisions invoked

• s. 11B
• s. 11
• s. 15
• s. 19
• s. 15H
• s. 15J
• s. 15F
• s. 28A

Parties

• Shah Investor’s Home Limited

Holding

The Noticee violated Clause 3 read with Annexure A of SEBI Circular dated June 08, 2023 and Clause 4 of SEBI Circular dated December 12, 2023 regarding upstreaming/downstreaming of client funds and is liable for monetary penalty under Section 15HB of the SEBI Act, 1992, with penalty of Rs. 4,00,000 imposed.

Full text

Page 2 of 16 Adjudication order in the matter of Shah Investor’s Home Limited 2. Whereas, the Competent Authority was prima facie of the view that there were sufficient grounds to adjudicate upon the alleged violation by the Noticee, as stated above and therefore, in exercise of the powers conferred under Section 15-I of the SEBI Act, 1992 and Rule 3 of SEBI (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995 (‘Adjudication Rules’ in short), read with Section 19 of the SEBI Act, 1992, the Competent Authority appointed Shri Amar Navlani, General Manager, SEBI as Adjudicating Officer (erstwhile AO) vide order dated July 11, 2025 to inquire into and adjudge under Section – 15HB of the SEBI Act, 1992 for the alleged violation by the Noticee. Pursuant to transfer of erstwhile AO, the undersigned was appointed as Adjudicating Officer by the Competent Authority on September 11, 2025. The appointment was communicated to the undersigned vide Communique dated September 19, 2025.

Page 3 of 16 Adjudication order in the matter of Shah Investor’s Home Limited a. Clause 3 of SEBI circular SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/84 dated June 08, 2023 and clause 4 of SEBI Circular SEBI/HO/MIRSD/MIRSD-PoD- 1/P/CIR/2023/187 dated December 12, 2023 states that Stock Broker/Clearing Member (‘SB/CM’ in short) shall upstream all the clients’ clear credit balances to Clearing Corporation. Further, the clients’ fund shall be up streamed by SB/CM to CCs only in the form of either cash, lien on Fixed Deposit Receipts (FDRs) or pledge of units of Mutual Fund Overnight Schemes (MFOS). On verification of the Bank Statements provided by the Trading Member, it was observed that Trading Member has retained the client funds instead of upstreaming the client funds with Clearing Corporations. The excess amount retained with Trading Member is attached as Annexure-5. b. Further, on perusal of aforesaid bank statements it is observed that in 18 instances out of 30 sample dates, the trading member has not upstreamed client funds. Therefore, it is alleged that SIHL failed to comply with requirements as stipulated in the Clause 3 of SEBI circular SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/84 dated June 08, 2023 and clause 4 of SEBI Circular No. SEBI/HO/MIRSD/MIRSD-PoD- 1/P/CIR/2023/187 dated December 12, 2023. 1.2. Trading Member failed to comply with framework for flow of funds as per SEBI Circulars (Settlement Account to USCNBA): a. As per the aforesaid SEBI Circulars dated June 08, 2023

Page 4 of 16 Adjudication order in the matter of Shah Investor’s Home Limited 1.3. Trading Member failure to comply with Framework for Flow of Funds is as per SEBI Circulars (DSCNBA to Settlement Account): a. In terms of Clause 3 of aforesaid SEBI Circular dated June 08, 2023 and Clause 4 of aforesaid SEBI Circular December 12, 2023, payment to clients should be done only from Downstreaming Client Nodal Bank Account (DSCNBA) post receiving of funds from CC/CM same day and any balance left in the account post cut off time should be transferred to USCNBA for further upstreaming it to the CCs. Nonetheless, on examination of flow of funds under Downstreaming Client Nodal Bank Account (DSCNBA), it has been observed that Trading Member has transferred the funds from DSCNBA to Settlement Account which is not in compliance with the SEBI Circulars. Detail of transfer of funds from DSCNBA to Settlement Account is attached as Annexure-6. b. The said transfers of clients funds from DSCNBA to settlement account of trading member are in non-compliance with aforementioned SEBI Circulars which mandate specific rules for the movement and segregation of client funds and thus the trading member is alleged to have violated the aforesaid regulatory provisions contained in the aforesaid circulars. 1.4. Trading member failed to follow cut-off time for Upstreaming of Client Funds to Settlement Account: a. According to requirements as per Clause 3 of aforesaid SEBI Circular dated June 08, 2023 and Cl

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