The Securities Appellate Tribunal (SAT) on June 27 stayed the Securities and Exchange Board of India’s June 20 order against IIFL Securities over misusing client funds.
Sebi had prohibited IIFL Securities from accepting new clients for two years.
After the stay on the Sebi order, the IIFL Securities stock rallied over 5.5 percent on the NSE and, at 12 noon, the stock was quoting Rs 63.70.
“The Noticee didn’t assign its accounts appropriate nomenclature wherein it was keeping clients’ monies so as to clearly label them as ‘client accounts’. Additionally, it was mixing clients’ funds with its own funds before using those mixed funds for its own proprietary usage. In the end, it was using funds of its credit balance clients’ to not only fund trades of its debit balance clients but also to fund its own trades," the markets regulator said in its order.
Also Read: IIFL Securities-5 Paisa Merger: Now what?
IIFL Securities had clarified to the exchanges that the order pertained to inspections carried out for different periods between April 2011 and January 2017, which was prior to the issuance of the Enhanced Supervision Circular on September 26, 2016 by Sebi. This was made effective from July 1, 2017.
"The Sebi order applies the said circular retrospectively even while confirming that after the circular becoming effective there has been no non-compliance with the same," the broking firm had said.
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