IIFL misused its clients funds, SEBI took a big decision

SEBI (Securities and Exchange Board of India) has taken a major decision on the brokerage firm IIFL Securities. SEBI has banned IIFL (India Infoline Securities Private Limited) Securities from adding any new customer for 2 years. SEBI had conducted a total of 6 inspections from 2011 to 2017 and found that IIFL was failing to segregate its funds and client’s funds. Not only this, IIFL has misappropriated the credit balance in the funds of its customers and also misnamed the bank accounts of its customers. IIFL used customers’ funds having credit balances to meet its own debt obligations. As a result, SEBI took this major decision on IIFL.

The market regulator had examined IIFL’s books of accounts for the period from April 1, 2011 to December 31, 2013. The investigation was conducted between January 30 and February 3, 2014. SEBI observed that the conduct of IIFL was not in compliance with the provisions of the code of conduct for stock brokers prescribed under the SEBI Regulations, 1992.

SEBI, in its order dated June 19, said the noticee has violated the provisions of SEBI’s 1993 circular in multiple ways and also completely negated the basic principle of the circular by flouting regulatory directions. IIFL is now preparing to challenge this decision of SEBI in SAT.