SEBI has barred Prabhudas Lilladher from accepting any new assignments for a period of seven days starting December 15, 2025, following findings of multiple regulatory breaches.
The regulator’s action stems from a joint inspection by SEBI, along with major Indian stock exchanges, which reviewed the firm’s operations covering April 1, 2021 to October 31, 2022. TSEBI identified serious lapses including misuse of client funds, failure to settle client accounts in time, inaccurate margin reporting, mismatches in ledger and cash-equivalent balances, and unauthorized passing of penalties (levied by clearing corporations) onto clients.
One of the notable findings was that on three separate occasions in July 2021, the net available balance under the “G-value” test was negative — amounting to a shortfall of roughly Rs. 2.70 crore — indicating that client funds and collateral did not cover total client credit balances, a clear violation of safeguard norms meant for client protection.
SEBI said that despite corrections submitted by the firm and modest financial amounts in some breaches, the nature and pattern of regulatory non-compliance merited formal enforcement. As a result, the temporary business ban is meant as both a supervisory step and deterrent measure.
This move marks another regulatory action against the brokerage — earlier in July 2025, SEBI had imposed a fine of Rs. 11 lakh on Prabhudas Lilladher for similar market-norm violations, including misuse of funds and incorrect reporting.
For investors and clients associated with stock brokers, this development underscores the importance of due diligence and the risks stemming from procedural lapses in fund handling, margin reporting, and account settlement processes.
