Regulator Sebi has barred brokerage firm Allied Financial Services, its five directors and four other entities from securities markets for misappropriating client securities and other violations.
In an interim order, Sebi has also barred these ten individuals and entities from disposing of or alienating any assets, or create or invoke any charge on their assets, without prior permission.
Besides, they have been asked to provide a full inventory of all their assets, including their bank and demat accounts and mutual fund investments within five days.
Sebi said these entities can utilise their assets only for payment of money and for delivery of securities to clients or investors under the NSE's supervision.
The regulator has also asked banks and depositories to ensure that no debits are made in the accounts of the barred entities.
The ten entities have also been asked to submit their objections, if any, and details of payments made to their clients within 21 days to Sebi.
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The order follows Sebi's probe into alleged irregularities at Allied Financial Services Pvt Ltd, pursuant to a preliminary inspection by the National Stock Exchange.
The NSE has also appointed a forensic auditor in the matter.
Besides Allied Financial, the order has been passed against its five directors -- Rajeev Kumar, Lalit Agarwal, Rajendra Prasad Basia, Awanish Kumar Mishra and Jitendra Kumar Tiwari, as also four others -- namely Money Mishra Financial Services, Money Mishra Overseas Pvt Ltd and two partners at Digi locker, Pankaj Garg and Jitender Malhotra.
In its report to Sebi, NSE observed non-availability of client funds worth Rs 94 crore, non-availability of client securities, non-settlement of inactive clients and non-segregation of transaction between own and client bank accounts.
It also found misuse of client funds by way of transferring their money to own bank account and making a donation, while payments were made to some clients without sufficient balance in the ledger.
Allied was also found to have indulged in dealings with unregistered entities, including Money Mishra entities, and of failing to maintain the requirement of continuous networth and giving disproportionate exposure to some clients.
The brokerage firm was also found to be offering assured returns to certain clients and it failed to comply with various reporting norms, among other irregularities. It also failed to do necessary due diligence while opening accounts of clients by not obtaining income details in client registration documents of three clients.
Sebi said it has also received other complaints from Finsec Law Advisor, on behalf of its clients Dalmia Cement (Bharat) Ltd and OCL India Ltd, against the brokerage firm for alleged fraudulent transfer of mutual funds and those complaints are being examined.
Besides, Dalmia and OCL have also filed complaints with the Economic Offences Wing of Delhi Police.
NSE, which has already issued show-cause notice to the brokerage firm for violation of its own bylaws, also told Sebi that Allied Financial has made investments in certain properties in Mumbai and Delhi.
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