The Securities Appellate Tribunal (SAT)on Tuesday stayed Securities and Exchange Board of India's (SEBI's) order against IIFL Securities from taking new clients for 2 years till further directions. Last week, the capital market regulator passed an order and debarred IIFL Securities from onboarding any new client on grounds of breach of code of conduct regulations.
Following this, IIFL Securities appealed to the tribunal against the SEBI order.
Earlier, SEBI said it conducted a thematic inspection of the books of accounts of IIFL during the period of January 30 to February 3, 2014, wherein the records and the processes of IIFL during the period of April 1, 2011, to December 31, 2013, were inspected. The regulator said it noticed that the actions of IIFL were not in compliance with the provisions of the code of conduct for stock brokers as stipulated by the Securities and Exchange Board of India (Stock Broker) Regulations, 1992.
SEBI found that IIFL failed to segregate its own funds from clients' funds, misused the credit balances in clients' funds for the benefit of clients having debit balances, and inappropriately designated the client bank accounts.
According to the final SEBI order, out of the 45 client bank accounts examined during inspections, 26 client bank accounts were not titled as ‘client accounts’ by
IIFL Securities. It was seen that funds were regularly being transferred from client bank accounts and clients’ dividend accounts to the control accounts of IIFL, which were managed and controlled by IIFL as its own bank account.
Meanwhile, the stay order moved the shares up, which surged more than 6 percent to the day’s high of Rs 65.90.
First Published: Jun 27, 2023 12:14 PM IST
