[ad_1]
The order stated that the inspection revealed that IIFL had not nomenclated 26 of its 45 clients’ accounts as ‘client account’ in bank record despite issuance of a warning by BSE.
The Securities and Exchange Board of India (Sebi) has barred IIFL Securities from onboarding any new client for a period of two years for violating the code of conduct regulations for stock brokers.
The order passed by the regulator on Monday disposes of the two inquiry proceedings initiated against the brokerage, following six inspections conducted by the regulators into the affairs of the company, Sebi said in his order.
Sebi conducted a thematic inspection of the books of accounts of IIFL from January 30 to February 03, 2014, during which the records and the processes of IIFL from April 01, 2011, to December 31, 2013, were inspected.
You have exhausted your
monthly limit of free stories.
To continue reading,
simply register or sign in
Subscribe to read on
Select your plan
All-Access
Access to premium stories
Digital Only
Access to premium stories
This premium article is free for now.
Register to continue reading this story.
This content is exclusive for our subscribers.
Subscribe to get unlimited access to The Indian Express exclusive and premium stories.
This content is exclusive for our subscribers.
Subscribe now to get unlimited access to The Indian Express exclusive and premium stories.
The Sebi action is for mixing clients’ funds with proprietary funds, for using credit-balance client accounts to settle obligations of debit-balance client accounts, and for using credit-balance client accounts to settle proprietary-trade obligations.
The order stated that the inspection revealed that IIFL had not nomenclated 26 of its 45 clients’ accounts as ‘client account’ in bank record despite issuance of a warning by BSE.
“While the past acts of the IIFL Securities had not been in tune with the established prudent market practices or with the regulatory instructions and the IIFL Securities has not conducted its affairs as a genuine market intermediary as unearthed during the repeated inspections conducted by SEBI, which have been already highlighted above at length, it has however now demonstrated its attempts to atone itself by correcting its wrongdoings and to suggest that the said violations have not continued as of now,” Sebi in its order said.
“In such circumstances, while action against the IIFL Securities is necessary to be taken in the light of the gravity of violations committed by it, a direction for the cancellation of the certificate would be too disproportionate punishment for not only the Notices itself but also to its clients, both retail and institutional, as well as act antagonistic to the development of the securities market at a whole,” it said.
On finding evidence of mixing client funds and for using client funds for settling obligations of proprietary account, the market regulator launched supplementary inspections of records between April 1, 2011 and June 30, 2014. In the third supplementary inspection, which took data for 695 trading days, ” IIFL was found to have misused the credit clients’ funds for the settlement obligation of debit balance clients on 687 days which was 98.85 per cent of the total aforesaid sample days”, stated the order.
“At the same time, on 29 days, IIFL was also found to have misused the funds of credit clients for the settlement obligation of proprietary trades,” it said.
© The Indian Express (P) Ltd
First published on: 20-06-2023 at 05:00 IST
[ad_2]
Source link