IIFL Securities will move to the Securities Appellate Tribunal (SAT) against market regulator Securities and Exchange Board of India’s (Sebi) order to ban the company from onboarding new clients for two years.
The market regulator on Monday barred IIFL Securities from taking new clients for 2 years in respect of its business as a stock broker for alleged mis-utilisation of client funds.
Sebi found that IIFL Securities has misused the funds of its credit balance clients for settlement of its proprietary trades as well as the trades of its debit balance clients from April 2011 to June 2014, and the said violations were again noticed during March 2017 inspection for the period of FY 2015-16 and 2016-17.
IIFL Securities said that the order does not affect the company’s existing business with the existing clients in its regulatory filing.
“IIFL had acted in complete disregard of the legitimate interests of its credit balance clients and has not only benefitted itself but also provided benefits to its debit balance clients at the cost of its credit balance clients by using funds of credit balance clients to settle its own proprietary trades as well as the trades of its debit balance clients to the tune of hundreds of crores of rupees,” Sebi had stated.
The order came after Sebi conducted multiple inspections of the books of account of IIFL for the period April 2011 to January 2017.
In a response to Sebi’s order, IIFL on Monday said it is in the ;process of preferring an appeal against the said order before Securities Appellate Tribunal.’
Further, the company said it has always met all its obligations towards exchanges and clients on time. It has always followed a “compliance first approach and carried out business in full compliance in letter and spirit with extant laws and regulations”.
