SEBI Issues Warning to DAM Capital Over Operational Lapses: Details and Company Response
The Securities and Exchange Board of India (SEBI) has recently issued a warning to DAM Capital Advisors, a company that was recently listed on the stock exchange, regarding certain operational shortcomings in its institutional broking business. This administrative warning comes after SEBI observed lapses during an inspection and advised the firm to improve its operations.
What Led to SEBI’s Warning?
SEBI conducted a detailed inspection of DAM Capital’s operations between February 1, 2024, and August 31, 2024, before the company’s shares were listed on the stock exchange. Based on this inspection, SEBI identified several areas where improvements were necessary and issued an official letter dated March 20, 2025.
In its communication, SEBI advised DAM Capital to be more vigilant and cautious in managing its operations, especially in terms of compliance with regulatory norms.
Company’s Response and Filing Details
DAM Capital promptly acknowledged the receipt of SEBI’s administrative warning and submitted a stock exchange filing to inform shareholders and the public about the development.
The company emphasized that the SEBI observations relate to operational aspects of its institutional broking business. DAM Capital has already taken corrective actions and implemented the necessary compliance measures to address the concerns raised by the regulator.
No Impact on Financial or Business Operations
The company reassured stakeholders that the SEBI warning does not impact its financial health, overall business operations, or daily activities. It clarified that the warning pertains strictly to operational compliance and not to any major regulatory violation or misconduct.
In its filing, DAM Capital stated, “There is no impact on the financials, operations, or other business activities of the company due to the administrative warning issued by SEBI.”
Key Compliance Issues Identified by SEBI
As part of a thematic inspection carried out by SEBI in January 2025, the regulator looked closely at how DAM Capital handled the “Upstreaming and Downstreaming of Clients’ Funds.” Following its review, SEBI noted specific areas where the company needed to improve. These included:
- Delays in Fund Transfers: Instances of delays in transferring client funds to the Clearing Corporation.
- Settlement Account Lapses: Some brokerage amounts were incorrectly credited to the company’s general bank account instead of the designated settlement account.
- Reporting Deficiencies: SEBI identified inaccuracies in the company’s segregation file, including missing retention reason codes and incorrect values.
DAM Capital’s Stock Performance
Despite the SEBI warning, DAM Capital’s stock showed resilience in the market. On the day of the announcement, the company’s shares closed 4.68% higher, trading at Rs 232 per share on the National Stock Exchange (NSE). This positive stock movement indicates that investors remain confident in the company’s long-term growth and financial stability.
Conclusion
While the SEBI warning highlights areas for improvement in DAM Capital’s operational processes, the company’s proactive response and swift corrective measures demonstrate its commitment to regulatory compliance. With continued vigilance and adherence to SEBI guidelines, DAM Capital aims to strengthen its operations and uphold investor trust.
