SEBI Cancels Registration of Ficus Securities for Mis-managing Clients' Funds, Securities
Moneylife Digital Team 29 September 2022
Capital market regulator Securities and Exchange Board of India (SEBI) has cancelled the registration of stockbroker Ficus Securities for mis-managing clients' funds and securities. The stockbroker flouted regulatory norms during the period April 2015 to January 2018, SEBI said in its order. On multiple occasions, Ficus Securities 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 Rs48.28 crore to Ficus Commodities and received Rs48.94 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 stockbroker norms.
 
"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's whole-time director SK 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 Securities has been expelled from the exchanges—BSE, NSE and MSEI—since March 2018 by declaring it as a defaulter. 
 
In the past few years, many brokers have been expelled from the markets. In several cases, brokers were said to have been luring clients with a promise of higher fixed return, only to dabble in the risky derivative segment and even diverted clients' money for other purposes. 
 
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