Groww Pays INR 48 Lakh To Settle Case With SEBI Over Security Lapses

Investment tech startup Groww has paid INR 47.85 Lakh to settle a case with SEBI that accused the IPO-bound company of violating stock brokers regulations and failing to conduct client due diligence on guidelines on anti-money laundering rules.

In its order dated May 14, the markets watchdog alleged that Groww violated multiple norms of the securities contract regulations, several SEBI circulars and stock brokers regulations.

SEBI further said that Groww was offering non-securities services such as UPI payments, lending and bill payments via its trading app, which could have exposed users to personal financial liability.

Inc42 has reached out to Groww for comments on the development. The article will be updated on receiving a response.

The markets regulator also found that Groww’s business continuity plan was being reviewed annually instead of every six months as mandated by SEBI.

“Applicant (Groww) failed to implement a surveillance framework where the trading activities are analysed through financial ability of the client and also failed to conduct necessary due diligence and Applicant did not update the financial/ income details in 83 instances of 41 clients,” SEBI’s order read.

In light of these lapses, SEBI sent a show-cause notice to Groww in November last year, questioning why it should not initiate an inquiry against and impose a penalty on the fintech startup for alleged violation of the aforementioned provisions.

Consequently, Groww settled the case with SEBI by paying INR 47.85 Lakh, without admitting guilt or denying the regulator’s findings.

“… In view of the acceptance of the settlement terms and the receipt of settlement amount as above by SEBI, the adjudication proceedings initiated against Applicant vide SCN dated November 25, 2024 is disposed of,” SEBI’s adjudicating officer Amit Kapoor said.

This is the second instance in the last one week that Groww has been penalised by the markets regulator. On May 13, Groww SEBI after the platform suffered a technical glitch that prevented users from placing trades.

The incident occurred on January 23, rendering Groww’s users unable to place trades on the platform for several hours. Earlier this week, the IPO-bound startup suffered yet another glitch, leading to discrepancies in the stock prices.

In June last year, to settle a case pertaining to alleged violation of norms regarding disclosures for its investment arm Groww AMC.

Besides Groww, there have been several instances of glitches with the online stock broking platforms, including Angel One, and Upstox over the past few months.

 

The post appeared first on .