sebi:Order/KS/AA/2020-21/7596
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Facts / Headnote
Misutilisation allegation under Section 23D SCRA not established; failure to settle inactive clients and incorrect enhanced supervision reporting established; penalty of Rs. 6,00,000 imposed under Section 15HB of SEBI Act; no penalty for KYC deficiencies under CIR/MIRSD/16/2011
Provisions invoked
- s. 15
- s. 15H
- s. 15J
- s. 15F
- s. 28A
- s. 23J
- s. 23D
Parties
- ISS Enterprises Limited
Holding
The Adjudicating Officer held that misuse of credit-balance client funds was not established after including free fixed deposits, but failure to settle inactive client accounts and misreporting of enhanced supervision data were established, and imposed a penalty of Rs. 6,00,000 under Section 15HB of the SEBI Act.
Full text
Page 2 of 25 of ISS Enterprises Limited (hereinafter referred to as “ISS / Noticee”). The period of inspection was from April, 2017 to July, 2018 (hereinafter referred to as “IP”).
Page 3 of 25 Holding Inquiry and Imposing Penalties) Rules , 2005 (hereinafter referred to as “SEBI Adjudication Rules”) for the above alleged violations committed by the Noticee.
Page 4 of 25 misuse of funds ranged from 3.14% to 50.85% of the credit balance clients. Further, the amount of mis-utilization of the credit client’s fund was observed to be in the range of the amount of Rs. 1.48 Crore to Rs. 28.85 Crore in the said instances. (b) In view of the above, it is alleged that the Noticee has used funds of credit balance clients for the benefit of debit balance clients. In view of the same, it is alleged that the Noticee has violated the provisions of Section 23D of SCRA read with Clause 1 of Annexure of SEBI Circular no. SMD/SED/CIR/93/23321 dated November 18, 1993 and Clause 3 of Annexure to SEBI Circular SEBI/HO/MIRSD/MIRSD2/CIR/P/2016/95 dated September 26, 2016.
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Source: SecMarx — sebi:Order/KS/AA/2020-21/7596. 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.