SEBI has prohibited Prabhudas Lilladher from taking on any new assignments for a period of seven days starting December 15, 2025, following findings of multiple serious regulatory violations during a joint inspection with stock exchanges.
The inspection — covering the period from April 1, 2021 to October 31, 2022 — uncovered several lapses, including misuse of client funds, delayed settlement of client accounts, incorrect margin reporting and unauthorized transfer of penalties to clients.
On three separate days in July 2021, Prabhudas Lilladher’s “G-value” (a regulatory metric that checks whether client funds plus collateral cover total client credit balances) was negative, indicating a shortfall of about Rs. 2.70 crore — evidence that client funds did not fully cover obligations.
Additionally, SEBI found that in several instances the firm misreported clients’ margins and exposures — sometimes showing higher margins than actually collected — and on around 10 occasions charged brokerage in excess of prescribed limits.
Although the firm attempted to attribute the issues to software errors or clerical mistakes, SEBI rejected these explanations. The regulator concluded that the breaches impacted core obligations related to client asset protection, margin management, reporting accuracy and fair brokerage practices — warranting formal disciplinary action.
For brokers, investors and clients alike, the order serves as a reminder of the risks when compliance lapses occur — especially those that compromise client fund safety, settlement integrity and accurate reporting.
