SEBI directs F6 Finserve to return siphoned off client funds, shares

9 Jun 2022

The Securities and Exchange Board of India today directed brokerage firms F6 Finserve and F6 Commodities and their promoter directors to return funds and securities of their client, along with annual interest of 15%, which they siphoned off in grave violation of regulatory norms.

In a final order passed against the two brokerage firms, Pankaj Goel, Meenu Goel and two other promoter directors, SEBI held that they were carrying out their broking operations with various flagrant violations and mismanaging their clients’ funds and securities.

Although the SEBI order did not specify the exact amount of client funds and securities that had to be returned, it stated separately that the claims by the clients of the broker valued 433 mln rupees.

The egregious irregularities in handling of client funds and securities were carried out for at least two years during 2016 to 2018 when an inspection by the National Stock Exchange of India brought it out in the open.

SEBI then took over the probe and carried out a detailed investigation. It found that the broker was not settling the credit balances of several clients in contravention of SEBI norms that required brokers to settle once every quarter.

Among several violations, F6 Finserve had used client securities to meet settlement obligations on its proprietary account and had transferred securities inter se between its clients.

Earlier, in April 2018, the NSE and BSE had declared F6 Finserve as a defaulter and expelled it. F6 Commodities was expelled by the commodity derivatives exchanges in May 2018.

In today’s order, SEBI also barred the two brokerage firms and the four promoter directors from all securities market activities and positions for five years.