SEBI slaps Rs 1 crore penalty on IIFL Securities for misusing client funds norms

The Securities and Exchange Board of India (SEBI) on May 20 said it has slapped a penalty of Rs 1 crore on India Infoline Ltd (IIFL) Securities for "violation" of norms related to client funds.

SEBI, which conducted multiple inspections of IIFL's books of accounts, said the company allegedly violated the rules by "failing to segregate its own funds from client funds", "misusing credit balance of client funds for debit balance client funds" and "not appropriately designating client bank accounts."

The inspections, which the market regulator referred to, were conducted between April 2011 and January 2017, as per the order.

"After taking into consideration all the facts of the case...I hereby impose a penalty of Rs 1,00,00,000/- on upon the Noticee i.e., India Infoline Limited (now known as IIFL Securities Ltd) under section 23D of SCRA for violation ofthe provisions of SEBI 1993 Circular," Adjudicating officer Prasanta Mahapatra stated in the order.

The penalty has been slapped on IIFL around three months after it paid Rs 2 crore to settle a case related to the violation of stock broker regulation norms with the SEBI.

It was alleged that IIFL Wealth Management Ltd and IIFL Securities Ltd knowingly manipulated the reference price of Alkem Laboratories for a block deal.

SEBI had conducted an examination of block deals to check any manipulation of reference price considered for execution of block deal trades in the scrip of Alkem Laboratories.

Pending the proceedings, IIFL Securities, in February, had proposed to settle the case without admitting or denying the guilt.