Sebi slaps on penalties of Rs 32 crore on IISL, AFSL, 3 individuals
In addition, the watchdog has adopted various guidelines against them.
The regulator issued two separate orders, dated July 2, against the ISSL, the AFSPL and its three administrators after conducting an in-depth investigation into the case for the period from February 20, 2017 to February 8, 2017. February 2019.
The ISSL is a clearing member while the AFSPL is a depository participant.
While imposing a fine of Rs 26 crore on ISSL, a Clearing Member, and also passing certain instructions, Sebi noted that his order would be subject to any order made by the Supreme Court.
In addition, the execution of the liability and the order would be subject to the orders of the National Company Law Tribunal and the National Company Law Appeals Tribunal (NCLAT).
These guidelines are part of a resolution process for the entire IL&FS Group, including ISSL. In January 2021, Sebi ruled that it had jurisdiction to determine ISSL’s monetary and non-monetary liabilities for breach and the order was also upheld by the Securities Appellate Tribunal (SAT) as the appeal of ISSL is pending before The Supreme Court.
In the 68-page order, Sebi noted that ISSL, as a clearing member, admitted to having serious shortcomings in risk management arguing that it followed a practice whereby collateral can be returned. to all its negotiating members, upon receipt of a request from the client.
“This shocking and cavalier approach to an important element of risk management deserves appropriate sanction. It has also been established that the Conduct of Notice (ISSL) is an unfair business practice and that it has treated mutual fund units in a fraudulent manner, ”he said.
In addition to the fine of Rs 26 crore, Sebi banned ISSL from acquiring new customers for two years, under certain conditions.
“The opinion must undertake a complete overhaul of all its procedures and policies, in particular its risk management policy. The notice must implement the necessary corrective measures to ensure that the observed violations do not recur, ”the watchdog said.
In the case of AFSPL, Sebi fined it Rs 3 crore. A penalty of Rs 3 crore was also imposed on Awanish Kumar Mishra, its managing director, and two directors – Himanshu Arora (Rs 14 lakh) and Jitendra Tiwari (Rs 7 lakh), in accordance with an 84-page ordinance from Sebi. .
The regulator also banned AFSPL and Mishra from entering the securities market for seven years. In addition, Mishra has been barred from associating with a listed entity, a significant subsidiary of a listed entity or a Sebi registered intermediary in any capacity for seven years.
Arora and Tiwari were excluded from the securities market for three years and one year, respectively.
The prohibition period would be effective from the date of the order.
In the order, Sebi noted that a depository participant acts as an interface between depositaries and investors. “It is this very aspect of security that the AFSPL has undermined by its behavior, which has proven to be fraudulent, misleading and an unfair commercial practice”.
According to the regulator, the AFSPL undermined the good faith, ethical standards and integrity which it was supposed to demonstrate, as a registered intermediary, in its relations with its clients.
Sebi had opened an investigation into the case following various complaints.
A complaint was filed in February 2019 by two Dalmia Group companies – Dalmia Cement East Ltd and OCL India – alleging a fraudulent transfer of mutual fund units worth Rs 344.07 crore by AFSL .
Another round of complaints, filed in December 2018 and January 2019 by Novjoy Emporium Pvt Ltd (NEPL), alleged an unauthorized transfer of mutual funds worth Rs 21 crore by AFSL. PTI RAM MR MR
Warning :- This story has not been edited by Outlook staff and is auto-generated from news agency feeds. Source: PTI