sebi:Order/GR/KG/2019-20/6773
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Facts / Headnote
Penalty imposed on the Noticee for contraventions of SEBI Circulars and Brokers Regulations
Provisions invoked
- s. 15A
- s. 15
- s. 19
- s. 12
- s. 15H
- s. 15I
- s. 15J
- s. 28A
- s. 23
- s. 23D
Regulations
- Reg. 17
- Reg. 26
Parties
- LKP Securities Limited
Holding
The Noticee, LKP Securities Limited, was held liable for misutilisation of clients' funds, non-maintenance of data pertaining to running account settlement of clients, and utilization of securities pledged for clients for purposes other than those of the said clients, and a total penalty of Rs. 5,00,000/- was imposed.
Full text
Adjudication Order in respect of LKP Securities Limited Page 2 of 18 3. It was allegedly observed that: a. In 50 out of 50 sample dates, funds of credit balance clients have been used for purpose of debit balance clients, thereby the Noticee had misused funds of credit balance clients to settle the obligations of debit balance clients. Such misuse of funds ranged from 44% to 70% of funds of credit balance clients for the selected sample days and the amount of misutilization of the clients’ funds ranged from Rs. 26.97 Crore to Rs. 50.44 Crore. It was alleged that such misuse of client funds are in violation of provisions of SEBI Circular No. SMD/SED/CIR/93/23321 dated November 18, 1993 and SEBI Circular No. MRD/DoP/SE/Cir-11/2008 dated April 17, 2008.
Adjudication Order in respect of LKP Securities Limited Page 3 of 18 SEBI/MIRSD/SE/Cir-19/2009 dated December 03, 2009 along with Regulation 17 and 18 of the Brokers Regulations.
Adjudication Order in respect of LKP Securities Limited Page 4 of 18 allegedly withdrawn funds from the clients account for purposes other than those which are permitted by SEBI. b. The Noticee had never withdrawn any funds from the client balances and have always kept separate client accounts for funds and securities from its own account. The two accounts were never mixed nor were there any transactions between the two accounts. It has been further stated that the SCN does not highlight a single instance where the Noticee has withdrawn funds from clients account for purposes other than those permitted under the said Circulars.
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Source: SecMarx — sebi:Order/GR/KG/2019-20/6773. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.