After capital markets regulator SEBI ruled IIFL’s commodities arms not “fit and proper” to act as commodity derivative brokers, group founder Nirmal Jain said that the order is restricted to IICL, and will not have any impact on the other businesses of the group. “The Commodity business contributes to less than 0.2% of the total company’s profit,” Nirmal Jain said in an interview to CNBC TV18. There are no unlawful gains mentioned in the SEBI order, and nothing specifically mentioned about the IIFL group, he added. Jain further clarified that IIFL’s loan against shares are minimal. The SEBI order puts an end to uncertainty with respect to developments over the NSEL issue.
Shares of Motilal Oswal Financial Services and IIFL Holdings slumped in trade on Monday morning, after stock market regulator SEBI Motial Oswal Financial Services share price slumped by more than 5% in the morning trade on NSE to Rs 579.50. IIFL Holdings shares plunged by more than 6% on NSE, to hit the day’s low at Rs 336.
Meanwhile, in a regulatory filing last week, Motilal Oswal Financial Services said Motilal Oswal Commodities Brokers is aggrieved by the order and consulting lawyers to explore legal options before it. The stock market regulator SEBI noted that reputation is an important factor for consideration of “fit and proper” criteria. Sebi said the reputation of the two entities have been seriously eroded, according to a PTI report.
The latest rulings have come against the backdrop of the payment scam at the National Spot Exchange (NSEL) that was discovered in 2013; and subsequently, many entities, including brokers, have come under the scanner of Sebi and other probe agencies.
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