sebi:WTM/AB/MIRSD/MIRSD-SEC-4/26525/2023-24

SEBI · SEBI · 2019-05-17 · Ashwani Bhatia, Whole Time Member

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

Certificate of Registration of Allied Financial Services Pvt. Ltd. (INZ000164832) cancelled

Provisions invoked

• s. 19
• s. 12(1)
• s. 12(3)

Regulations

• Reg. 3
• Reg. 9(f)
• Reg. 9
• Reg. 27
• Reg. 27(1)
• Reg. 42

Parties

• Allied Financial Services Pvt. Ltd.

Holding

The Certificate of Registration of Allied Financial Services Pvt. Ltd. (INZ000164832) as a stock broker was cancelled for multiple violations including misappropriation of client funds and securities, non-segregation of accounts, misuse of client funds, non-settlement of inactive client accounts, failure to maintain net worth, dealing with unregistered/related entities, offering assured returns, mis-reporting under enhanced supervision, and granting disproportionate exposure to clients.

Full text

__________________________________________________________________________________________ Order in the matter of Allied Financial Services Pvt. Ltd. 2 / 18 Garg and Jitender Malhotra are restrained from accessing the securities market and are further prohibited from buying, selling or otherwise dealing in securities, either directly or indirectly, or being associated with the securities market in any manner whatsoever, till further directions; b. The aforesaid Noticees shall cease and desist from undertaking any activity in the securities market, directly or indirectly, in any manner whatsoever till further directions;

__________________________________________________________________________________________ Order in the matter of Allied Financial Services Pvt. Ltd. 3 / 18 Authority (“DA”) to enquire into whether the alleged violations by the Noticee warranted suspension or cancellation of the Certificate of Registration granted by SEBI or any other action provided in Chapter V of the Intermediaries Regulation. On completion of the proceedings, the DA submitted a report dated September 27, 2022 (“DA Report”) recommending that the Certificate of Registration granted to the Noticee be cancelled.

__________________________________________________________________________________________ Order in the matter of Allied Financial Services Pvt. Ltd. 4 / 18 e. In relation to non-maintenance of daily reconciliation statement, it is submitted that the Noticee was not aware of any circular, rules or regulations or Bye-Laws of SEBI or NSE where a reconciliation statement of reasons for transfer of funds from client account to business account is to be maintained on a daily basis. f. Noticee submitted that securities were transferred on the basis of DIS slip executed by different clients. The securities were provided to it by its registered clients. g. It was submitted that in respect of the calculation of net worth there was a mathematical error in such calculation as Net worth. h. Payments were made by the Noticee out of the credit balance available in the respective accounts of the clients and the Noticee had not made any assurances to clients regarding providing assured returns. i. It was also submitted that the Noticees replies in the 11B matter may be adopted in the present proceedings also.

Source: SecMarx — sebi:WTM/AB/MIRSD/MIRSD-SEC-4/26525/2023-24. 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.