SAT stays Sebi order against IIFL Securities
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The regulator, in its order, had alleged that the broking firm had been found involved in unauthorised use of credit clients’ funds for the purpose of meeting the obligations arising out of its proprietary trades and the trades of debit balance clients.
The alleged violations by IIFL Securities were found in an inspection during 2011-2014. Improper marking of clients’ bank accounts is another reason the regulator imposed the penalty.
The firm is India’s 12th largest stock brokerage with 5.53 lakh active clients.
Sebi said IIFL had not implemented Sebi rules framed in 1993 in its true spirit by 25 years.
IIFL Securities, in its appeal before SAT, argued that the impugned order relates to a period prior to July 2017 when a new circular popularly known as ‘Enhanced Supervision Circular’ dated September 26, 2017, came into effect.
“The impugned order contains a positive certification that after the Enhance Supervision Circular was brought into effect in 2017, there has been no violation. The core submission of the Appellant is that this circular is being applied retrospectively.”IIFL Securities submitted to SAT that the Sebi punishment was ‘disproportionately harsh’ and ‘unreasonable’.
“Judicial deference has been thrown to the winds, and on this ground alone, the impugned order deserves to be set aside,” the brokerage said. “For similar allegations, Sebi had issued orders with a smaller monetary penalty only to other brokers.”
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