Groww Settles SEBI Case Over Tech Glitch for ₹34 Lakh

In the fast-paced world of online trading, a few minutes of downtime can mean missed opportunities and frustrated investors. This became a reality for users of Groww on 23 January 2024, when a technical glitch disrupted trading activities. The repercussions of this incident have now led to Groww settling the case with the market regulator SEBI, paying a sum of ₹34.12 lakh.

Following this technical issue, SEBI raised concerns, alleging that Groww did not timely make a "full and true disclosure" to the exchange on Log Analytics and Monitoring Applications (LAMA).

What exactly happened?

The core of the issue traces back to a tech glitch that occurred on that specific day. For many investors relying on Groww's platform to execute trades, the system disruption meant they were unable to access services and participate in the market at a critical time. In the volatile stock market, such outages can lead to significant inconvenience and potential financial impact for users.

SEBI's Concerns and Observations

Following the incident, SEBI took notice and raised several points regarding Groww's handling of the situation and its preparedness. According to SEBI's observations, there were concerns that Groww, in its capacity as a stockbroker, failed on multiple fronts during the disruption:

• Data Reporting Failure: It was noted that critical data was not sent to the exchange through its logging and monitoring system (LAMA) during the period of disruption.
• Lack of Backup Support: SEBI also highlighted an alleged lack of adequate backup support for clients. This included observations of non-functional phone lines, inaccessible trading terminals, and a lack of available staff to assist users facing issues.
• Ineffective Cybersecurity Checks: The market regulator also pointed towards the ineffectiveness of Groww's cybersecurity checks, specifically its Vulnerability Assessment and Penetration Testing (VAPT), in identifying and preventing such an issue.

The Path to Settlement

Rather than continuing with the adjudication process, Groww opted for a settlement with SEBI. This mechanism allows entities to resolve issues with the regulator by paying a settlement amount without admitting or denying the findings. By paying the ₹34.12 lakh, Groww has effectively closed this chapter related to the January 23rd tech glitch.

What does this mean?

For Groww, the settlement allows them to move forward from the incident and the regulatory scrutiny it attracted. For investors, it serves as a reminder of the inherent risks associated with relying solely on digital platforms for trading and the importance of platform stability and robust support systems. For the broader market, it underscores SEBI's role in ensuring that trading platforms maintain high standards of technical resilience, data reporting, and customer support, especially during unforeseen events.

While the settlement amount has been paid and the proceedings closed, the incident highlights the critical need for brokerage firms to invest continuously in their technological infrastructure, implement rigorous cybersecurity measures, and ensure that effective backup and communication channels are in place to serve clients seamlessly, even when things go wrong.

Also read our detailed Groww review with a full analysis of charges, features, and more to get the complete details: Groww Review