Markets regulator Sebi on Wednesday imposed a fine of Rs 3 lakh on IIFL Securities Ltd for violating code of conduct for stockbrokers.
The Securities and Exchange Board of India (Sebi) conducted a probe in suspected insider trading by one of the clients of stockbroker IIFL Securities, earlier known as India Infoline Ltd.
During the course of an investigation, Sebi observed that IIFL accepted orders in the trading account of its client, Vimala, from a person other than the client without obtaining proper authorisation and only on the basis of verbal instructions.
The member-client agreement of Vimala with IIFL clearly mentions that a written authorisation letter is required to authorise another person to trade in her account, the regulator noted.
However, IIFL relied on mere oral instructions and thereby failed to exercise due diligence in the conduct of its business as a stockbroker, Sebi said.
"It is of utmost importance that under no circumstances a stockbroker breaches the terms and conditions of the member-client agreement," the regulator said
Lapses by IIFL were violative of the code of conduct for stockbrokers under Stock Brokers Regulations, Sebi said while imposing the penalty.
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