On Friday, the Securities and Exchange Board of India (SEBI) revoked the registration of LFS Broking and banned its Managing Director, Saiyad Jiyajur Rahaman, from working with any registered intermediary for five years due to violations of market regulations.
In addition, SEBI canceled LFS Broking’s registrations as a stockbroker, portfolio manager, depository participant, and research analyst.
“I note that since Noticee No. 2 (Saiyad Jiyajur Rahaman) has not acted with integrity, honesty, and has not displayed ethical behavior and fairness, he ceases to be a fit and proper person in terms of the Intermediaries Regulations,” stated SEBI’s Whole Time Member Kamlesh C Varshney in a 56-page order.
SEBI also highlighted that LFS Broking, in collusion with Rahaman, misused its registration certificates to deceive investors and illegally mobilize funds.
The market watchdog concluded that LFS Broking fails to meet the criteria under the Intermediaries Regulations.
In its investigation, SEBI discovered that LFS Broking’s registration was misused to promote LFS-PMS and another unregistered entity, MOL Commodities. These entities amassed significant funds from investors, which were funneled through various bank accounts controlled by Rahaman.
Specifically, Rahaman’s accounts recorded transactions amounting to Rs 9.3 crore, including transfers to LFS Broking’s proprietary trading account.
SEBI noted that Rs 266 crore was mobilized by LFS-PMS from 6,219 clients, many of whom did not engage in any securities market trades.
Additionally, the accounts of LFS-PMS and MOL Commodities, holding funds from numerous investors, showed substantial financial activity without proper agreements or regulatory compliance.
This order follows SEBI’s receipt of complaints that LFS Broking and PMS Services (LFS-PMS), Rahaman’s proprietorship firm, were operating an investment scheme under the guise of SEBI registration.
The current proceedings stem from an inquiry report dated September 20, 2023, where the Designated Authority (DA) recommended canceling LFS Broking’s registration and barring Rahaman from any registered intermediary for five years.
