sebi:WTM/MPB/IVD/ID1/195/2021
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Facts / Headnote
Violations established; monetary penalty of Rs. 26 crores imposed on ISSL (Rs. 25 crores under Section 15HA and Rs. 1 crore under Section 15HB of the SEBI Act, 1992). Order subject to any order passed by the Hon'ble Supreme Court; enforcement subject to orders of Hon'ble NCLT/NCLAT/Appellate Authority from NCLAT.
Provisions invoked
- s. 11B
- s. 19
- s. 11(1)
- s. 15H
- s. 15J
- s. 11B(2)
Regulations
- Reg. 4
- Reg. 6
- Reg. 11
- Reg. 9(f)
- Reg. 4(1)
- Reg. 3(a)
- Reg. 9
- Reg. 7A
- Reg. 10F
- Reg. 75
Parties
- IL&FS Securities Services Limited (ISSL)
Holding
SEBI held that ISSL violated Clauses A(2) and A(5) of the Code of Conduct under Schedule II read with Regulation 9(f) of the Broker Regulations and Regulation 4.5.1 of the NCL F&O Regulations by releasing collateral to AFSPL without corresponding reduction in margin requirements, and violated Regulations 3(a) and 4(1) of the PFUTP Regulations by facilitating fraudulent transfer of MF units. A total penalty of Rs. 26 crores was imposed.
Full text
Order in the matter of IL&FS Securities Services Limited Page 1 of 68 WTM/MPB/IVD/ID1/195/2021 SECURITIES AND EXCHANGE BOARD OF INDIA
Order in the matter of IL&FS Securities Services Limited Page 2 of 68 1.2. Dalmia Group, vide letter dated February 27, 2019, alleged that ILFS Securities Services Limited (hereinafter referred to as “ISSL/ Noticee”), a clearing member of NSE Clearing Limited, was also involved in the fraudulent transfer of MF Units from the accounts of DCEL and OCL.
Order in the matter of IL&FS Securities Services Limited Page 3 of 68 3.1.1. Different CA certificates with different financial statements and shareholding patterns were submitted by AFSPL to MCA/ NSE and to the Noticee. 3.1.2. Anomalies noted in the KYC pertaining to existing relationship of AFSPL with the IL&FS group. 3.1.3. Anomalies noted regarding income of AFSPL in the KYC. 3.1.4. Noticee ignored significant unusual increase in the asset size of AFSPL during FY 2017-18. 3.1.5. Noticee ignored AFSPL having multiple doubtful transactions with related parties where the recovery was doubtful.
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Source: SecMarx — sebi:WTM/MPB/IVD/ID1/195/2021. 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.