This stockbroker made funds disappear! SEBI’s stick has come, ban on adding clients Last updated: 29 Nov 2025, 18:17 IST SEBI has taken major action against the country’s renowned brokerage firm Prabhudas Leeladhar. This action was taken by the company in case of manipulation with customers’ funds. Along with this, the firm was banned from adding any new client for 7 days. New Delhi. SEBI came down hard on Prabhudas Lilladher, one of the oldest and most prestigious brokerage houses in the country. The market regulator has imposed a 7-day ban on these brokers. During this period the company will not be able to take any new business. This means SEBI has stopped brokers from adding new clients. This ban will take effect from December 15. What came out in SEBI’s more than 100-page investigation report clearly shows that the matter was not just a minor mismatch or technical glitch. The report shows that serious violations such as large-scale shortfalls in clients’ funds, incorrect margin reporting, untimely transfer of shares, recovery from brokers exceeding the prescribed limit from many clients and flagrant violations of various rules were constantly occurring. The most shocking revelation in SEBI’s investigation was the shortfall found in customer funds. During investigation, it came to light that the company had a gap of around Rs 2.70 crore in customer funds. This means that the company did not actually have as much money as indicated in the records of the system. And it wasn’t just that. According to the report, funds from 1283 customers were not returned by settlement time. SEBI called this a major threat to the safety of investors and considered it a serious compliance failure. In many cases, clients’ money was found mixed with the company’s operating accounts, falling directly into the category of regulatory violations. Incorrect margin reporting and overcharging of brokers also came to light. SEBI clearly stated in its report that the company had reported incorrect margins on several occasions. The amount of margin recovered from customers was shown differently in the reporting. This affects the complete transparency of margin compliance. Similarly, in the cases of many clients, it was found that more brokers were recovered from them than the SEBI rules. That is, the percentage of brokers charged has been increased, which is a direct payment violation and has a direct impact on the pockets of investors. SEBI termed it as a “systemic issue”, that is, this irregularity was going on in the company for a long time and not due to any sudden mistake. Client shares stuck in CUSA, not transferred to demat on time. Investigation also found that shares of many customers were not allowed to reach their demat. They were held on CUSA account. CUSA account is a place where only short-term or temporary documents are kept. It is against the rules to hold real shares here. According to the SEBI report, this is a “major violation” as it unnecessarily keeps clients’ shares in the company’s custody, creating the possibility of misuse. SEBI’s comments SEBI said that this whole matter is not a typo or bookkeeping error. This is a major systemic failure in which clients’ money, margins and stocks were not managed safely. For this reason, the regulator took the strictest step and imposed a new 7-day business ban so that the company improves its systems and sends a message to the market that even the slightest negligence with client funds and shares will not be tolerated. About the Author Jai Thakur Jai Thakur has been associated with the world of news since 2018. Working as Senior Sub Editor in News18Hindi since 2022 and is part of the business team. There is interest in news related to business, especially stock market. Apart from this… read more Location: New Delhi, Delhi First Published: 29 November 2025, 18:17 IST home business This broker has made funds disappear! SEBI has used its stick, will not be able to add new customers