February 24, 2021 10:35:47 pm
Regulator Sebi on Wednesday imposed a total fine of Rs 4.65 crore on Kassa Finvest Pvt Ltd and seven individuals for misusing clients’ securities, among other violations.
It was found that Kassa Finvest indulged in activities other than stockbroking business, such as providing assured returns to its clients and investors, as per a Sebi order.
Further, the watchdog noted that the broking firm had executed trades on behalf of the clients with a condition that the margin money can be used for trading in any segment/ exchange. Subsequent payments made to clients towards assured return establishes that Kassa Finvest had never disclosed to clients the transactions entered on their behalf, it added.
These activities of the firm were in the nature of a ‘Portfolio Manager’ and by acting as such without obtaining appropriate registration, it has acted in violation of Portfolio Managers Regulations, Sebi said.
The regulator also noted that funds to the tune of Rs 46.82 crores have been transferred from client bank accounts to the business bank accounts of the firm from 2008 onwards.
By such conduct and activities, Kassa Finvest had failed in segregating its own funds and clients’ securities, misutilised clients’ money and also misappropriated the clients’ securities, Sebi said.
The firm indulged in providing funds to the tune of approximately Rs 26.45 crore to its group or related entities wherein two of the individuals were major beneficiaries, it added.
Stock Broker Regulations require brokers to take adequate steps for redressal of investor grievances within a period of one month from the date of receipt of complaint.
However, it was noted that as on April 15, 2015, 421 complaints were pending against Kassa Finvest as against 255 pending complaints against it as per SCORES as on March 11, 2015.
An individual Ashok Kumar on behalf of Kassa Finvest had failed to furnish complete information/ details pertaining to financial ledgers, demat accounts/statements, details of bank accounts/ statements, as sought from him through summons dated March 3, 5 and 16, 2015.
Also, the regulator in an order passed in September 2017, debarred the firm and some individuals from accessing the securities market for a period of 10 years and some of them have also been directed to make refunds to the investors.
The individuals were the senior officials of the firm during the relevant period and are liable for the acts and omissions committed by Kassa Finvest, the order noted.
Accordingly, Rs 4.5 crore penalty has been imposed on Kassa Finvest, Ashok Kumar, Umashankar Sharan Srivastava, Anjana Kumar, Siddharth Shankar, NItika Shankar, payable jointly and severally.
Besides, Rs 7.5 lakh fine each has been levied on Anil Kumar Dhawan and Manoj Kumar Agarwal.
In a separate order passed on Wednesday, Sebi imposed a fine of Rs 5 lakh each on Jesse Trading Pvt Ltd and Nikita Enterprise Pvt Ltd for their failure to furnish the information sought by the regulator through summons in the matter of Supreme Tex Mart Ltd.
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