Shares of IIFL Securities nosedived over 19 percent in early trade on June 20 after the Securities and Exchange Board of India (SEBI) banned its stockbroking unit from signing new clients for two years. The ban came after the brokerage was found violating the market regulator's norms by mixing clients' funds with proprietary funds, using credit-balance client accounts to settle obligations of debit-balance client accounts, and using credit-balance client accounts to settle proprietary-trade obligations.
At 10.26 am, shares of IIFL Securities were trading at Rs 61.85, down 13.13 percent on the National Stock Exchange. Trading volumes were also strong as 80 lakh shares changed hands on the exchanges, the highest in two years.
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While inspecting the brokerage's accounts and operations, SEBI found the alleged violations, which took place between April 2011 an January 2017.
IIFL Securities, in an exchange filing, said that SEBI had applied its rules retrospectively and hence, the company is in the process of putting an appeal against the said order before the Securities Appellate Tribunal.
Also Read: IIFL Securities barred from accepting new clients for two years by Sebi
"The SEBI order applies the said norms retrospectively even while confirming that after the rules becoming effective there has been no non-compliance with the same," IIFL Securities stated in the exchange filing.
The company also highlighted that the ban will not impact its business with the existing clients.
Moreover, the company has also restructured its business by hiving off its investment-related activities from its stock broking business.
Other group companies, 5paisa Capital, IIFL Finance and 360 ONE WAM were down 1-5 percent while rival Angel One rose over 2 percent.
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