SEBI Imposes Rs1 Lakh Penalty on Choice Equity Broking for Cybersecurity Lapses

Moneylife Digital Team 31 October 2025

Investor Interest

Market regulator Securities and Exchange Board of India (SEBI) has imposed a penalty of Rs1 lakh on Choice Equity Broking Pvt Ltd for non-compliance with the regulator’s cybersecurity and cyber resilience framework.

A joint thematic inspection was conducted by SEBI along with the Bombay Stock Exchange (BSE) and Multi-Commodity Exchange (MCX) on 30 September and 1 October 2024, to examine the broker’s adherence to regulatory requirements.

Choice Equity Broking, which has been registered as a stockbroker with SEBI since 27 April 2009, was found to have certain deficiencies in maintaining and classifying its critical IT assets.

SEBI inspection revealed that firewalls at the company’s Marol-1, Marol-2 and several branch offices were missing from the critical asset list. The firm also lacked a documented policy for identifying and classifying assets based on business sensitivity and had no records of Board approval for the asset inventory.

In its response, Choice Equity Broking stated that it had a valid cybersecurity policy in place, which was independently audited by Innowave IT Infrastructures Ltd for FY23–24. The audit report confirmed that the company had comprehensive procedures for identifying and managing critical IT assets and associated risks.

The broker further clarified that the firewalls at Marol-1 and Marol-2 were owned and operated by separate entities and, therefore, were rightly excluded from its asset list. This explanation was confirmed in writing by the auditor. However, as a precautionary measure, Choice Equity Broking later included these firewalls in the critical asset list.

While SEBI accepted the broker’s explanation regarding the Marol firewalls, it found that firewalls at certain branch offices were wrongly omitted from the critical asset list. The regulator noted that the company’s justification for this omission was inconsistent and unsupported by sufficient evidence.

After considering all the facts and submissions, SEBI concluded that Choice Equity Broking had failed to include certain branch office firewalls in its list of critical assets, thereby violating Section 2 of Paragraph 11 of the SEBI Circular dated 7 June 2022. Consequently, SEBI imposed a monetary penalty of Rs1 lakh on the broker for the lapse.

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