Sebi imposes penalty of Rs 1 cr on IIFL for misusing client securities

Capital markets regulator Sebi on Friday imposed a penalty of Rs 1 crore on India Infoline Ltd (IIFL) for misutilisation of client securities.

The amount has to be paid by IIFL within 45 days.

The order came after Sebi conducted multiple inspections of the books of accounts of IIFL, now known as IIFL Securities, for the period April 2011 to January 2017.

Based on the findings, the market watchdog initiated adjudication proceedings.

"It was found that the noticee (IIFL) had misused client funds in the range of Rs 0.59 crores to Rs 397.02 crores for settlement obligation of debit balance clients and in the range of Rs 0.26 crores to Rs. 73.28 crores for proprietary purposes, in addition to settlement obligation of debit balance clients," Sebi said.

In addition, the interest on funds misused by the noticee amounted to Rs 34.87 crore, it added.

Further, the noticee has not settled the funds of clients during the inspection period as mandated by Sebi.

Consequently, the market watchdog slapped total fine of Rs 1 crore on the firm and noted that certain violations by IIFL were repetitive in nature.

Meanwhile, in a separate order, the regulator levied a fine of Rs 20 lakh on three entities for indulging in manipulative trades in the shares of Le Waterina Resorts and Hotels Ltd (LWRHL).

The amount is to be paid jointly and severally by the entities, it added.

These entities "have executed trades which were fraudulent and intended to manipulate the scrip price of LWRHL, and have therefore, violated ...PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) Regulations."

This comes after Sebi conducted investigation in the matter of Le Waterina Resorts and Hotels Ltd for the period October 2010 to March 2012, examining the trading activity in the company's scrip.

Through a separate order, the market regulator imposed a penalty of Rs 5 lakh on Rajendra Kumar Chokhany HUF for carrying out non-genuine trades in illiquid stock options on BSE.