Market regulator Securities and Exchange Board of India (SEBI) has stopped stockbroker Prabhudas Lilladher Private Limited from taking on any new assignments for 7 days from December 15, 2025. This action follows allegations from SEBI that the firm broke rules regarding client funds, margins, reporting, and brokerage.
SEBI restricts the Prabhudas Lilladher for taking new clients for 7 days
In an order issued by Chief General Manager N Murugan, SEBI said, “The Notice prohibited from taking up any new assignment or contract or launching a new scheme, in so far as may be applicable to it as a SEBI registered Stock Broker for a period of 7 days from December 15, 2025 (Monday).”
This order comes after a joint inspection by SEBI, NSE, BSE, and MCX, which covered the period from April 1, 2021, to October 31, 2022. SEBI’s investigation claimed that the brokerage firm misused client funds, did not settle client accounts on time, reported margins and client balances incorrectly, and charged more brokerage than allowed by regulations.
Regulator found fund misuse by stockbroker
On the main issue of fund misuse, SEBI found that on three events in July 2021, there was a total shortfall of about Rs 2.70 crore between client bank balances plus cash-equivalent collateral and total client credit balances. This showed that the firm misused client money, which goes against client protection rules.
The firm claimed that the negative balances were due to COVID-related disruptions and were minor in comparison to its overall business. However, SEBI found this explanation to be unfounded and not legally relevant. The order noted, “the shortfall identified in the client account necessarily represents a withdrawal of client funds.
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