IIFL Securities is fined by Sebi for breaking securities contract regulations and circulars, Directive issued!

In Short: IIFL Securities has been fined Rs 11 lakh by Sebi for violating securities contract regulations and circulars. The regulator cited inaccurate client ledger balance reports and a “fund-based agreement” involving borrowing money from clients. The broker had paid 136 clients a total of Rs 17.43 crore. Sebi aimed to deter wrongdoing and promote ethical conduct in the securities market.

IIFL Securities has been fined Rs 11 lakh by Sebi for violating securities contract regulations and circulars. The regulator cited inaccurate client ledger balance reports and a “fund-based agreement” that involved borrowing money from clients. The broker had paid 136 clients a total of Rs 17.43 crore.

A broker was found to be regularly collecting payments from 20 clients, with interest rates ranging from 4% to 5% annually. Despite clients giving instructions to set up a fixed deposit, the ledgers revealed no such deposit had been made, revealing a fraudulent practice.

IIFL Finance and NBFC clients were found to be using funds deposited in the Trading Ledger for trading and margin requirements, with the broker paying clients an interest of approximately 11% for these funds.

Sebi has ruled that IIFL Securities, a securities firm, failed to comply with Circulars / directions issued by SEBI and stock exchanges, despite their statutory obligation to adhere to these provisions. The order aimed to deter wrongdoing and promote ethical conduct in the securities market. Notices, a registered intermediary, is required to maintain professionalism and adhere to statutory compliances, ensuring violations are promptly addressed and penalties imposed.

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