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Sebi cancels registration of stock broker for mis-managing clients’ funds, securities

Capital markets regulator Sebi on Friday cancelled the registration of stock broker Ficus Securities for mis-managing clients’ funds and securities. The stock broker flouted regulatory norms during the period April 2015 to January 2018, the Securities and Exchange Board of India (Sebi) said in an order.

On multiple occasions, Ficus used its clients’ securities for settlement of its own pay-in obligations and has also transferred clients’ securities to other entities or has pledged those securities to avail funds for itself, Sebi noted.

Further, clients’ securities were not available with Ficus as it had pledged them to avail loans from financial institutions and consequently was not settling the accounts of its clients on a monthly or quarterly basis.

It was noted that during the period of April 2015 till December 2016, Ficus transferred Rs 48.28 crore to Ficus Commodities and received Rs 48.94 crore during the said period from Ficus Commodities. This transaction was done at the same time when Ficus was not in a position to repay or settle funds due to its credit clients.

The regulator found that Ficus used its connected entity, Ficus Commodities for diverting its clients’ funds which resulted in the violation of stock broker norms.

The various flagrant regulatory lapses were noticed in the way Ficus was operating, specially the way Ficus was mismanaging its clients’ funds and securities, Sebi said.

“Ficus has not only failed to fulfil its avowed duty towards its clients, be it redressing their grievances or settling the funds due to its clients, but has gone to the extent of misutilising its clients’ funds and securities,” Sebi Whole Time Director S K Mohanty said.

Accordingly, the regulator has cancelled “the certificate of registration granted to Ficus Securities Pvt. Ltd” and the directive will come into force with immediate effect.

It has been noted that Ficus has been expelled from the exchanges — BSE, NSE and MSEI– since March 2018 by declaring it as a defaulter.

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