The Securities and Exchange Board of India (SEBI) has issued an administrative warning to IIFL Capital Services over lapses in due diligence related to debt securities, the company disclosed in an exchange filing on Tuesday.
The warning letter, dated March 7, follows SEBI’s inspection of the company’s merchant banking division, covering debt issues managed between April 1, 2022, and April 30, 2024. The market regulator flagged concerns over the disclosure of issue-related expenses and the timelines for fee payments to intermediaries in offer documents.
“The order was received on March 10, following an inspection of its merchant banking division’s debt issues between April 1, 2022, and April 30, 2024,” the company said in its filing.
SEBI cites regulatory deficiencies
After reviewing IIFL Capital’s response to the inspection findings, SEBI issued the administrative warning, citing deficiencies in adherence to the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021.
IIFL Capital clarified that SEBI’s action does not have any financial impact on the company’s operations or performance.
IIFL Capital shares rise despite regulatory warning
Despite the regulatory warning, shares of IIFL Capital were trading 1.46 per cent higher at Rs 207.85 apiece on the Bombay Stock Exchange (BSE) on Tuesday.
SEBI has recently intensified its scrutiny of merchant banking activities, previously barring Axis Capital and JM Financial from handling debt issues over regulatory non-compliance. The regulator also issued an administrative warning to FMCG major Nestlé India last week for alleged insider trading violations.
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