SAT stays Sebi order against IIFL Securities till further notice; stock surges 6%

The stay order bolstered the shares, which surged more than 6% to the day’s high of Rs 65.90.

Last week, the capital market regulator passed an order and restrained IIFL Securities from onboarding any new client on grounds of breach of code of conduct regulations.

Following this, IIFL Securities appealed to the tribunal against the Sebi order.

The order by Sebi was passed following a detailed inspection by the regulator in 2014 on the book of accounts of the brokerage firm to check if they were compliant with the regulations.

Sebi found that IIFL Securities did not segregate its own funds from clients’ funds, and misused credit balances in clients’ funds for the benefit of clients having a debit balance.

The regulator further said that funds were regularly being transferred from client bank accounts and clients’ dividend accounts to the pool accounts of IIFL, which were managed and controlled by IIFL as its own bank account. Sebi then issued two showcause notices to IIFL Securities, one in May 2017, and the other in October 2021.

After a rigorous investigation into the matter for more than six years, Sebi found the brokerage firm guilty and has barred it from adding any new client.

However, IIFL Securities had said that the order won’t affect the company’s existing business with the existing clients.

While the brokerage firm has managed to get a stay on the order, further move by the market regulator will be eyed.

At 12.20 pm, shares of the brokerage were 6.3% higher at Rs 64.15 on the NSE. The 2-year ban order by Sebi last week saw the shares tank 20%.