The shares of IIFL Securities, a popular online trading platform, experienced a significant increase of 9.2% on Tuesday, reaching a peak of Rs 65.9 per share during the session. This surge was a result of the Securities Appellate Tribunal (SAT) intervening and temporarily halting a recent order issued by the Securities and Exchange Board of India (SEBI).
On June 20, 2023, SEBI, which is the regulatory body for the markets, issued an order against IIFL Securities. This order prohibited the stockbroker from acquiring new clients for a period of two years, specifically in its capacity as a stockbroker. SEBI conducted thorough inspections spanning various periods from April 2011 to January 2017, which led to this decision.
In response to SEBI’s order, IIFL Securities challenged it before the Securities Appellate Tribunal, and the tribunal has currently suspended SEBI’s order until further review.
During their inspections, SEBI examined IIFL Securities’ financial records and operational processes from April 2011 to December 2013, specifically during a thematic inspection conducted from January 30 to February 3, 2014. The purpose was to assess whether the stockbroker was complying with the regulations. SEBI discovered that IIFL Securities had failed to properly separate its own funds from those of its clients, misused credit balances in clients’ accounts to benefit clients with debit balances, and inappropriately designated client bank accounts.
As a result of these findings, SEBI carried out six comprehensive inspections of IIFL Securities’ financial records simultaneously across four different offices of the company. These inspections took place from August 7 to September 19, 2014.
Despite these regulatory challenges, the stock of IIFL Securities, categorized as a small-cap stock, has shown a consistent increase for the third consecutive session on Tuesday. Over this period, it has surged by almost 12%.