SEBI Issues Regulatory Censure against Raghunandan Capital for Multiple Compliance Lapses

Moneylife Digital Team 04 September 2025

Investor Interest

Market regulator Securities and Exchange Board of India (SEBI) has issued a regulatory censure to Raghunandan Capital Pvt Ltd, a SEBI-registered stockbroker, for multiple violations of stockbroker regulations and SEBI circulars. The action follows a thematic inspection carried out jointly with the National Stock Exchange (NSE), BSE, Multi-Commodity Exchange (MCX), and National Commodity and Derivatives Exchange (NCDEX) from 7th November to 8 November 2023.

SEBI's inspection revealed widespread lapses in compliance with the SEBI (Stock Brokers) Regulations, 1992, and various circulars issued by SEBI and stock exchanges. These findings were communicated to the broker in January 2024, and although Raghunandan Capital submitted its response in April 2024, SEBI concluded that several violations remained unaddressed.

One of the major issues identified was the failure to settle client running accounts. The inspection found 151 such cases where settlements were not carried out despite no transactions for over 30 days.

In 77 of these instances, settlements failed due to incorrect bank IFSC codes, but the broker did not report these as ‘untraceable’ to the exchanges as required. Another 28 cases showed delays or false claims of settlement, including situations where cheque payments were not realised or only journal entries were passed without actual transfers.

In 46 cases, settlements were not made at all, despite being due, with delays extending up to nine months in some cases. In two accounts, the findings remained inconclusive.

SEBI's inspection also revealed that the broker retained client funds in excess of margin requirements in 560 instances. Of these, 281 cases were the result of incorrect margin calculations, 172 cases involved failure to consider obligations across all exchanges and 105 cases related to non-settlement on the first Friday of the quarter as mandated.

These practices were found to be in breach of SEBI circulars issued in 2009, 2016, 2021, and 2022. The regulator observed that such violations undermined investor protection and the principles of timely settlement of client accounts.

In addition, Raghunandan Capital failed to provide adequate proof of dispatch for 457 bounced retention statement emails and did not produce SMS logs of client communications at the time of settlement. Although the broker later submitted a dispatch register and some proof of delivery, inconsistencies in the records raised doubts about their authenticity.

After reviewing the submissions and evidence, SEBI’s designated authority (DA) concluded that Raghunandan Capital had failed to comply with essential settlement and reporting requirements. While some explanations were accepted, the recurring lapses in settlement, excess retention of client funds and deficiencies in documentation led SEBI to impose a regulatory censure on the broker under the SEBI (Intermediaries) Regulations, 2008.

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