Markets regulator SEBI on Tuesday imposed a total fine of Rs 12 lakh on Finquest Securities Pvt Ltd for multiple lapses, including misutilisation of client funds and failure to settle accounts of clients within the stipulated time.
The watchdog carried out an investigation of the broking and depository participant operations of Finquest during February 11 to February 18, 2019. This was for the inspection period from April 1, 2017 to February 18, 2019.
Out of the sample days, it was found that the broker had misutilised client funds of non-promoter-related clients on October 9 and October 10, 2018, as per an order.
According to SEBI, Finquest reported incorrect figures under weekly monitoring of clients' fund assets as on November 30, 2018, It was also found that incorrect details of clients' funds and securities were filed with the exchange as on October 26, 2018 and December 31, 2018.
"It is established that noticee (Finquest Securities) was not settling accounts of its clients within stipulated time as prescribed by SEBI, in 9 instances for periods over 94 days and in case of 2 active and 43 inactive clients, settled accounts only after observations were highlighted by inspection team," the order said.
Further, the regulator noted that Finquest funded one client beyond the stipulated period and allowed further exposure to the tune of Rs 3.58 crore out of total 25 clients examined, which was in violation of of SEBI norms.
"It has also been established that the noticee provided incorrect information to the exchanges on its networth and on risk based supervision," the order said.
While imposing fines totalling Rs 12 lakh, SEBI also noted that the noticee has made efforts to meet with the compliance gaps post the inspection.
In another order, the watchdog imposed a fine of Rs 5 lakh on an individual in the matter of Action Financial Services (India) Ltd. The individual -- Atul Sharma -- was fined for deliberately indulging in manipulation of the company's scrip and creating a misleading appearance of trading to induce innocent investors in the securities market.
In a separate order, the regulator slapped a fine of Rs 3 lakh on Sushil Financial Services Pvt Ltd for using funds of credit balance clients for settlement obligations of debit balance clients, among other violations.