SEBI has imposed penalties totalling more than Rs 32 crore on IL&FS Securities Services (ISSL), Allied Financial Services (AFSPL) and three individuals.
SEBI has passed 2 separate orders against ISSL, and AFSPL and its three directors after it carried a detailed investigation into the matter. (ISSL is a clearing member while AFSPL is a depository participant)
While imposing a fine of Rs 26 crore on ISSL, a clearing member, and also passing certain directions, Sebi noted that its order would be subject to any order passed by the Supreme Court.
Also, enforcement of the liability and the order would be subject to the orders of the National Company Law Tribunal and the National Company Law Appellate Tribunal (NCLAT).
A complaint was filed in February 2019 by two Dalmia Group companies — Dalmia Cement East and OCL India — alleging fraudulent transfer of mutual fund units worth Rs 344.07 crore by AFSL.
Another set of complaints, made in December 2018 and January 2019 by Novjoy Emporium (NEPL) alleged unauthorised transfer of mutual funds worth Rs 21 crore by AFSL.
These directions come against the backdrop of the entire IL&FS Group, including ISSL, undergoing a resolution process. In January 2021, Sebi held that it has the jurisdiction to determine the monetary and non-monetary liabilities of ISSL in case there are violations and the order was also upheld by the Securities Appellate Tribunal (SAT) while ISSL’s appeal is pending before the Supreme Court.
Sebi has also barred ISSL from acquiring any new clients for two years, subject to certain conditions.In the case of AFSPL, Sebi has imposed a fine of Rs 3 crore on it.
A penalty of Rs 3 crore has also been slapped on Awanish Kumar Mishra its managing director, and two directors — Himanshu Arora (Rs 14 lakh) and Jitendra Tiwari (Rs 7 lakh), as per Sebi’s 84-page order.
The regulator has also barred AFSPL from accessing the securities markets for seven years.
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