Markets regulator Sebi on Friday cancelled the registration of LFS Broking and barred its MD Saiyad Jiyajur Rahaman from being employed or associated with any registered intermediary for five years for violating market norms.
The regulator also cancelled the registrations of LFS Broking as a stockbroker, portfolio manager, depository participant, and research analyst.
“I note that since the Noticee No. 2 (Saiyad Jiyajur Rahaman) has not acted with integrity, and honesty and has not displayed ethical behaviour and fairness, he ceases to be a fit and proper person in terms of the Intermediaries Regulations,” Sebi’s Whole time member Kamlesh C Varshney said in the 56-page order.
Further, Sebi observed the conduct of LFS Broking, where it allowed to use the registration certificates in collusion with Rahman, to deceive investors for the illegal mobilisation of funds.
The markets watchdog holds that the brokerage firm is also not satisfying the criteria prescribed under the Intermediaries Regulations.
In its probe, the regulator also found that LFS Broking’s Sebi’s registration was misused to promote LFS-PMS and another unregistered entity MOL Commodities. These entities collected substantial funds from investors, which were channelled through various bank accounts managed by Rahaman.
Specifically, Rahaman’s accounts saw transactions totalling Rs 9.3 crore, including transfers to LFS Broking’s proprietary trading account.
Sebi noted that Rs 266 crore was mobilised by LFS-PMS from 6,219 clients, many of whom did not execute any trades in the securities market.
In addition, the accounts of LFS-PMS and MOL Commodities, holding funds from numerous investors, showed significant financial activity without proper agreements or regulatory compliance.
The order came after Sebi received certain complaints that LFS Broking and PMS Services (LFS-PMS), a proprietorship firm of Rahaman, was running an investment scheme, assuring returns, and it was being run as a legitimate act under the disguise of registration granted by the regulator to the brokerage house.
The present proceedings are emanating from the enquiry report dated September 20, 2023, wherein the Designated Authority (DA) had recommended for cancellation of registration granted to LFS Broking in various capacities and has recommended that Rahaman should be debarred from any registered intermediary for five years.
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First Published: Jun 28 2024 | 10:14 PM IST
