SEBI Closes Investigation Against IIFL Securities, Calls Previous Allegations Minor

The Securities and Exchange Board of India has closed its investigation into IIFL Securities Ltd., and stated that previous stock broker regulations related allegations on the brokerage were only procedural and the lapses were minor.

This was decided based on a designated authority’s report, which was responsible for this inquiry.

In an order released on Friday, the regulator did not find merit in continuing its action on IIFL Securities, for accusations including delays in account settlements, errors in retention statements, stock reconciliation discrepancies, client collateral account closures, and margin reporting. 

As per the information available in the order, key issues included delays in account settlements affecting 0.003% of total accounts, errors in sending retention statements, and minor mismatches in stock reconciliation processes. However, SEBI also took cognisance of the reply filed by IIFL. 

The brokerage argued that the discrepancies took place because of the operational scale and technical issues, but mentioned that no clients suffered any financial loss.

Additionally, IIFL Securities’ case benefited from its mention of remedial steps. The brokerage mentioned that it brought improvements in its internal processes, risk management practices, and compliance procedures.

It pointed out that subsequent inspections by SEBI, stock exchanges, and depositories had found no major observations of non-compliance. The designated authority also observed these efforts and confirmed that the firm had taken corrective steps to avoid future lapses.

The markets regulator has also mentioned that a previous penalty of Rs 11 lakh was paid by the brokerage in August last year and no recurring issues were observed thereon. It was also noted by SEBI that the allegations against the brokerage were not serious in nature and did not affect the market and the clients in an adverse manner.