sebi:WTM/SM/EFD/DRA1/27528/2023-24
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Facts / Headnote
Held that Noticee violated SEBI 1993 Circular and Clauses A(1), A(2) and A(5) of Code of Conduct; disposes of two enquiry proceedings covering six inspections for period April 01, 2011 to January 31, 2017
Provisions invoked
- s. 12
Regulations
- Reg. 9(f)
- Reg. 9
- Reg. 27
- Reg. 26
- Reg. 27(4)
- Reg. 27(1)
Parties
- IIFL Securities Limited
Holding
IIFL flagrantly violated the SEBI 1993 Circular by failing to properly designate client bank accounts, mixing client funds with its own funds in pool/control accounts and using them for its own purposes, and using credit-balance client funds for debit-balance clients and proprietary trades, thereby also violating Clauses A(1), A(2) and A(5) of the Code of Conduct.
Full text
Final Order in the matter of IIFL Securities Limited Page 2 of 64 2. SEBI had conducted a thematic inspection of the books of accounts of IIFL during the period of January 30 to February 03, 2014 (hereinafter referred to as ‘Thematic Inspection’) wherein the records and the processes of IIFL during the period of April 01, 2011 to December 31, 2013 were inspected. The purpose of the said inspection was to examine as to whether IIFL was working in compliance with the provisions of the SEBI Circular ref. SMD/SED/CIR/93/23321 dated November 18, 1993 (hereinafter referred to as the “SEBI 1993 Circular”) as well as SEBI circular ref. MRD/DoP/SE/Cir- 11/2008 dated April 17, 2008 as far as segregation of funds and securities of clients are concerned. In the said inspection conducted at the Corporate Office of IIFL viz. B Wing, Trade Centre, Kamala Mills Compound, off Senapati Bapat Marg, Lower Parel, Mumbai, it was noticed that the actions of IIFL were not in compliance with the provisions of the aforementioned SEBI 1993 circular read with clauses A(1), A(2) and A(5) of the code of conduct for stock brokers as stipulated in Schedule II of the Securities and Exchange Board of India (Stock Broker) Regulations, 1992 (hereinafter referred to as “Broker Regulations”) as the records of IIFL were found to be lacking in the following aspects: 2.1. Failure to segregate its own funds from clients’ funds; 2.2. Misuse of credit balances in clients’ funds for the benefit of clients having debit b
Final Order in the matter of IIFL Securities Limited Page 3 of 64 comprehensive inspection was conducted in order to examine if IIFL was maintaining its books of accounts and other records in the manner required to be maintained under the Broker Regulations and whether the said maintaining of records were in compliance with the provisions of securities laws, regulations, rules, circulars, bye-laws and directions issued by SEBI and the stock exchanges from time to time. The findings of this comprehensive inspection were supplemented by three (3) supplementary inspections, covering the aforesaid total period covered under Thematic Inspection and Comprehensive Inspection viz. April 01, 2011 to June 30, 2014, and additionally one more inspection was also done covering a period from April 01, 2015 to January 31, 2017, as per the details given below:
Final Order in the matter of IIFL Securities Limited Page 4 of 64 # Type and date of inspection Period of inspection Place inspected (if any) Purpose of inspection
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Source: SecMarx — sebi:WTM/SM/EFD/DRA1/27528/2023-24. 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.