New Delhi, May 13 -- Online investing platform Groww has settled a case with the Securities and Exchange Board of India (SEBI) pertaining to an outage in its trading app last year even as it suffered another technical glitch.
Groww, which recently rejigged its ownership structure ahead of a planned initial public offering, has paid Rs 34 lakh to the capital markets regulator to settle the matter, according to a settlement order on Tuesday.
Coincidentally, the order came a day after Groww's trading app on Monday suffered another glitch that provided inaccurate stock price information and showed profits of some users surging by 10,000% and temporarily making them millionaires. Several users also complained on social media platforms that their trade orders were executed before the trigger price was hit. Later in the day, the company admitted the error. "Some of our users observed discrepancy in stock prices. This was a temporary issue and is now resolved," the company tweeted.
Meanwhile, the settlement follows a show cause notice that SEBI sent to Groww in October 2024 asking why the company as a stock broker did not publish key values to exchanges on Log Analytics and Monitoring Application (LAMA) on January 23, 2024. These "key values", as per regulatory norms, are shared with the stock exchanges to watch for any technical glitches and maintain smooth functioning of trading systems.
SEBI noted that Groww did not have telephone lines, trading terminals and employees for attending trading calls of clients required in the event of any technical glitches. This resulted in the "complete denial of service" to clients during the glitch period, the order read. The regulator added that Groww's vulnerability assessment process was ineffective.
As per media reports, Groww's trading app experienced an hour-long outage on January 23, 2024, during intraday trading with many users taking to social media complaining that they were unable to login. Two days later, the company's CEO and founder Lalit Keshre admitted to the error in a social media post and said that Groww would communicate "more proactively".
Following the notice in October, Groww filed an application with SEBI seeking to settle the matter without "admitting or denying the findings of facts". In March this year, SEBI agreed that the case be settled.
SEBI said in an order Tuesday that is now disposing the matter in view of the acceptance of the settlement terms and the receipt of the settlement amount.
Backed by New York-based Tiger Global and several other venture capital firms, Groww in March rejigged its shareholding structure, with plans to issue convertible preference shares to its existing shareholders and collapse of differential voting rights held by the company's founders, as part of the transaction.
The company also moved its domicile back to India from the US last year as it started preparing for an IPO to raise up to $1 billion from the stock market. Groww counts Lalit Keshre, Harsh Jain, Ishan Bansal and Neeraj Singh as its founders.
Groww was founded in 2016 as a mutual fund investment platform. Over the years it ventured into consumer lending, payments, and asset management through subsidiaries.
Published by HT Digital Content Services with permission from VC Circle.