The Securities and Exchange Board of India (SEBI) found that Focus Shares & Securities had failed to segregate client's funds and misused client money for its proprietary trading. The firm has also transferred funds from and to the client accounts for meeting its obligation of proprietary trades.
Focus Shares & Securities is a stock broker registered on the BSE, the National Stock Exchange (NSE) and Multi Commodity Exchange of India Ltd (MCX).
"I conclude that noticee has failed to maintain segregation of client's funds, using the terms 'Client Accounts' for the bank accounts maintained for clients with various banks and further, misused the clients funds...," SEBI's general manager D Sura Reddy said in an order on Thursday.
Noting that that the broker had failed "to maintain high standards of integrity, promptitude, fairness, proper care and skill in the conduct of its business", Reddy has imposed "a total penalty of Rs five lakh" on it.
SEBI had conducted an inspection on March 21, 2013 into the books of Focus Shares & Securities, to ascertain whether the broker had complied with the regulator's norms with respect to segregation of funds and securities of clients.

Among others, SEBI probe had found that the broker had transferred more than Rs 7 crore during 2011-12 and 2012-13 from clients' accounts to own account.

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