SEBI Action: The Securities and Exchange Board of India (SEBI) has barred IIFL Securities (formerly India Infoline Limited) from taking new clients for the next two years. SEBI has done this due to violation of the rules of the code of conduct of stock brokers. SEBI has issued this order on Monday. The Securities and Exchange Board of India (SEBI) found in the investigation that the brokerage company IIFL Securities had misused investors’ funds, after which SEBI has taken this decision.
Why market regulator SEBI took this step
This step has been taken by the regulator on misappropriation of customers’ funds and SEBI has issued this order after inspection of accounts of IIFL several times (6 times) during April, 2011 to January, 2017. In its investigation, SEBI found that IIFL used unspent customer funds to settle its proprietary trading stock trading transactions from April 2011 to June 2014.
Brokerage company found guilty – SK Mohanty
In his order, SEBI whole-time member SK Mohanty said, “Having perused the full details, I have no difficulty in concluding that the company has violated the provisions of SEBI’s 1993 circular by misusing the funds of its clients. ” Not only this, the company used the funds of customers having credit balance to repay its own loan obligations.
IIFL misappropriated clients’ funds
For many years, SEBI had its eyes on IIFL when SEBI inspected the accounts of the brokerage company and checked whether they were following the rules or not. In its investigation, SEBI found that IIFL Securities was not segregating its funds and clients’ funds. Also, it misappropriated the funds of customers having credit balance for the benefit of customers having debit balance.
SEBI has not taken this decision suddenly, but the regulator has found IIFL guilty of compromising the financial interests of the customers during the years 2011 to 2017 and only after that has taken a tough decision to stop adding new clients for 2 years.
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