Sebi fines Sushil Financial for violating stock broker norms
Press Trust of India | New Delhi Feb 01, 2016 07:28 PM IST
Capital markets regulator Sebi has slapped a penalty of Rs 24 lakh on Sushil Financial Services (SFS) for violating stock broker norms.
A probe by the Securities and Exchange Board of India (Sebi) found that there was transfer of funds between securities client bank account and commodities client bank account, among others.
Commodity broker Sushil Global Commodities Pvt Ltd (SGCPL), an associate company of SFS and also a client of it allegedly used its client account to sell securities taken by it as collateral from its commodities clients towards recovery of outstanding debits from them.
Sebi, in its order, said that the rule “does not permit moneys to be withdrawn from the clients account for or towards payment of debt due to the group company of the broker from the client, or, money in respect of which there is liability of client to the group company of the broker”.
“The debt/liability of the client towards the group company of the client cannot become the debt/ liability of the noticee (SFS) with the client,” it added.
The broker also allegedly violated Sebi norms by using the credit fund balances of clients for obligations of debit balance clients.
Imposing a total fine of Rs 24 lakh, the regulator said that the fine “will be commensurate with the violations” committed by SFS.
Sebi had conducted an inspection into the books of Sushil Financial Services between the period of April 1, 2012 and September 4, 2014, to ascertain whether the broker had complied with the regulator’s norms with respect to segregation of funds and securities of clients.
Besides, Sebi probe had also found that the broker had failed to incorporate the word “Client Account” in the bank account name which is required as per the regulator’s circular.