Capital market regulator SEBI has cancelled the stock broking licence of Fairwealth Securities (FSL) for not carrying out its fiduciary responsibility towards clients.
The order emanates from an interim report of NSE received by SEBI in October 2019.
The forensic audit report has found FSL breached regulations on various counts including unauthorised off-market transactions, trading in clients’ accounts, misappropriation of clients’ securities, acts resulting in unavailability of securities, unauthorised pledging of clients’ securities, non-settlement of clients’ accounts, mis-utilisation of funds for own purposes/debit balance clients, submission of incorrect networth certificate to stock exchange, non-cooperation with the auditor, related party transactions and non-segregation of funds/securities of clients.
Consequently, an ad interim ex parte order was passed by SEBI against FSL and thirteen other entities upon the finding that the entities were in prima facie violation of the SEBI regulations.
Subsequently, on November 25, 2019 BSE appointed a forensic auditor, Sarath & Associates, to look into the working of FSL as directed by the interim order. In December 2020, BSE submitted the forensic audit report to SEBI.
SCN issued
Last July, SEBI had issued a show-cause notice to FSL as why action should not be against cannot be taken against as recommended by the designated authority.
FSL has neither filed any reply nor entered appearance during the personal hearings granted by SEBI.
The market regulator has found flagrant violations of the provisions governing the functioning of a stock broker and deep apathy towards the interests of the clients.
In the enquiry report, the DA has recommended that the Certificate of Registration of FSL be cancelled, said SEBI.
In agreement with the recommendation made by the DA, SEBI has cancelled the Certificate of Registration of FSL.