The proceedings arose from an inspection during which SEBI identified deficiencies relating to NISM (National Institute of Securities Market) certification, maintenance of signature cards, processing of demat and transfer requests, documentation and reporting. The designated authority (DA) had initially recommended that Alankit Assignments be prohibited from taking up new RTA clients or assignments for one year and also be issued a regulatory censure.
One of the key findings concerned NISM certification of associated persons (APs). During the inspection period, 39 APs were initially found without the requisite certification and 10 were found without valid certification. After considering Alankit Assignments response, the DA found that 24 persons did not have the certification at any point, and 10 did not have a valid certification during the inspection period. SEBI noted that Alankit Assignments had subsequently ensured that all its APs held valid certifications and that no adverse observations on this issue were made during the 2024 inspection.
SEBI also found deficiencies in the maintenance of physical signature cards. The inspection showed that signature cards were unavailable for 46% of physical folios, while more than 90% of folios relating to 67 client companies and 100% of folios relating to 40 companies lacked signature cards. SEBI, however, took into account that the problem was recognised as an industry-wide issue in a subsequent post-inspection analysis and that Alankit Assignments had made efforts to obtain the records. The non-availability had also substantially reduced in subsequent inspections.
The order also records delays in processing duplicate share certificate requests. Of 2,026 requests received during the inspection period, 123 or 6.07% were identified as delayed. Of these, 88 were delayed by up to 10 days, while 35 cases were delayed by more than 10 days, representing 1.72% of the total requests. SEBI examined several individual cases involving discrepancies in names, addresses and supporting documents before arriving at its findings.
In another area, Alankit Assignments had processed 54 demat requests after the prescribed 15-day period. The inspection also found delays in 14 transfer re-lodgement requests, along with instances involving mismatched signatures and deficiencies in transfer documentation. SEBI ultimately established violations concerning the delayed demat requests and transfer re-lodgement process.
After examining the various allegations, SEBI established violations relating to NISM certification, non-maintenance of signature cards, delayed processing of 54 demat requests, delays and documentation deficiencies in transfer re-lodgement requests, and incorrect reporting in half-yearly reports. These findings formed the basis for determining the appropriate regulatory action.
The DA had recommended a one-year prohibition on accepting new RTA clients or assignments. However, SEBI noted that the established violations were operational and technical in nature and did not involve fraud, deliberate misrepresentation or a wilful attempt to circumvent regulatory requirements. It also noted that the deficiencies largely occurred during the COVID-19 period, that Alankit Assignments had shown measurable improvement in subsequent inspections, and that no demonstrable loss to investors or the integrity of the securities market had been established.
Another important factor was that SEBI had already imposed a ₹10 lakh penalty on Alankit Assignments through separate adjudication proceedings arising from the same inspection and findings. SEBI held that, although adjudication and enquiry proceedings serve different regulatory purposes, the principle of proportionality requires the overall regulatory consequences for the same underlying conduct to remain commensurate with the gravity of the violations.
Consequently, SEBI concluded that imposing an additional 12-month prohibition on taking new clients or assignments would be harsh and disproportionate. Instead, it decided that a regulatory censure would be appropriate and justified.
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