LI Network
Published on: December 08, 2023 at 12:04 IST
The Securities Appellate Tribunal (SAT) reversed the Securities and Exchange Board of India’s (Sebi) decision to prohibit IIFL Securities from onboarding new clients for two years and reduced the imposed fine from Rs 1 crore to Rs 20 lakh.
Previously known as India Infoline Ltd., IIFL Securities had appealed against Sebi’s order in June, which accused the brokerage house of misusing client funds.
SAT, comprising Presiding Officer Justice Tarun Agarwala and technical member Meera Swarup, set aside Sebi’s order, stating there was no misuse of client funds.
The tribunal deemed Sebi’s interpretation of the 2016 circular, considering the non-funded portion of the bank guarantee, as “patently erroneous.”
While noting a technical breach for failing to change the nomenclature of client bank accounts as required under the 1993 circular, SAT emphasized it was not a misuse of client funds. Consequently, the tribunal reduced the penalty to Rs 20 lakh, deeming it sufficient for a “technical breach.”
Sebi’s June order had accused IIFL Securities of failing to segregate its funds from clients’, misusing funds for settlement, and violating regulations during multiple inspections conducted between April 2011 and January 2017.
