SEBI levied a ₹1 lakh penalty on a broker for failing to maintain pre-order authorisations for 38 clients and inadequate IP address logging, breaching surveillance norms.
SEBI Penalises Broker for Non-Maintenance of Client Authorisations
The Securities and Exchange Board of India (SEBI) has imposed a ₹1 lakh penalty on a stockbroker for failing to maintain pre-order authorisations for 38 clients and not recording IP address logs. The action follows an inspection that revealed systemic lapses in compliance with SEBI’s robust order trail (ROT) framework.
The regulator found that the broker did not secure client authorisation prior to executing trades, undermining the integrity of trading controls. Additionally, the absence of proper IP logging compromised the ability to trace trade origins, posing risks of unauthorised trading and market misuse. SEBI held that these failures violated Regulation 16(4) of the SEBI (Broker-Sub-Broker) Regulations, 1992, and undermined investor protection mandates.
This penalty signals SEBI’s continued focus on digital compliance and audit trail integrity. Practitioners must ensure that brokers implement automated systems to capture and archive client consents and technical metadata such as IP addresses. The ruling reinforces the necessity of robust internal surveillance mechanisms to meet evolving regulatory expectations.
