In its investigation, which began on June 17, 2025, the market watchdog found that the brokerage did not comply with the regulations of several stock brokers. The audit was conducted for the period between April 1, 2023 and August 31, 2024.
In a 42-page order, Sebi said that Anand Rathi failed to report the technical malfunctions that occurred within the stipulated time on May 21, 2024.
The company, in its defense, said it had alerted the exchange about the malfunction within an hour of the incident when the initial report was submitted the next day. However, it acknowledged the delay in submitting the Root Cause Analysis (RCA).
The order also noted that Anand Rathi had violated the capacity utilization limits set at 85% and 95%, going beyond 70% of the installed capacity.
The brokerage firm was also found to have violated pitch management norms.
Among other things, Anand Rathi violated the rules related to the password policy. Sebi also found that Anand Rathi did not have adequate data leakage prevention (DLP) systems in place during the audit period, as required under Securities and Exchange Board of India regulations and National Stock Exchange of India guidelines.
Although the broker claimed that it had already deployed a McAfee solution in 2020 and subsequently implemented Zscaler, Sebi noted that McAfee’s subscription expired in December 2021 and there was no evidence of renewal or active use during the audit period. Evidence provided for the Zscaler system is shown to be applied only after inspection.
Accordingly, SEBI concluded that the broker had violated data security regulations that require the deployment of tools to detect and prevent data leakage.
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