Shares of IIFL Securities Ltd surged as much as 13.89% to hit a 52-week high of ₹134.40 apiece on the BSE, a day after the Securities Apellate Tribunal (SAT) set aside Securities and Exchange Board of India (SEBI) order prohibiting the company from onboarding new clients for a period of two years.

The shares of the company opened at ₹125.75, up 6.5% as against the previous closing price of ₹118. At 1:25 pm, the share price of the company was trading 5.59% higher at ₹124.60. The company’s market capitalisation stood at ₹3,814.90 crore, with more than 6.86 lakh shares exchanging hands on the BSE against the two-week average of 0.97 lakh. The company hit a 52-week low of ₹48.23 on March 29 this year.

In the past one month, three months and one year, the counter has given 7.17%, 4.56% and 11.29% in returns, respectively. In the year-to-date period, the counter has given 13.84% in returns.

Meanwhile, SAT has also reduced the penalty imposed on the company to ₹20 lakh from ₹1 crore earlier. "There has been no misuse of client funds and by wrongly considering the non-funded portion of the bank guarantee as per the 2016 circular, an attempt has been made to show that there was a misuse of client funds which, in our opinion, is patently erroneous," the order passed by Justice Tarun Agarwala, presiding officer, SAT, said.

SAT also said there is no failure on the part of the appellant to segregate the monies of the client. It is not that these monies have been misused for their purposes, and so no penalty under Section 23D of the SCRA could be imposed, according to the order.

In June this year, the capital markets regulator barred IIFL Securities from onboarding new customers for two years after conducting multiple of the books of account of IIFL for the period April 2011 to January 2017. The SEBI order said IIFL "flagrantly violated" the provisions of the SEBI 1993 circular in various ways to "clearly disregard" the basic premise of the said circular.

As per the SEBI order, the company firstly didn’t assign its accounts appropriate nomenclature wherein it was keeping clients’ monies to clearly label them as ‘client accounts’. Additionally, it was mixing clients’ funds with its funds before using those mixed funds for its proprietary usage. IIFL claims itself to be a large broker having thousands of retail clients and a number of institutional clients, to whom it provided services, it had said.

However, five days later, SAT had stayed the SEBI order against the company from taking new clients for two years until further orders, thereby providing interim relief to the brokerage firm.

Securities Appellate Tribunal (SAT)

IIFL Securities shares surge 14% to hit 52-week high on SAT relief