IIFL Securities Ltd, earlier known as India Infoline Limited, has been banned by the market regulator, the Securities and Exchange Board of India (SEBI), from onboarding new clients for two years.

Shares of the share broker plunged as much as 19.24% in the early trading hours on Tuesday to an intraday low of Rs 57.50 apiece on the National Stock Exchange (NSE). At 11:11 am, the stock was trading 13.55% lower at Rs 61.55.

In a SEBI order on June 19, the regulator stated that IIFL had violated Clauses A(1), A(2) and A(5) of the Code of Conduct for Stock Broker of the SEBI 1993 Circular in various ways to disregard the basic premise of the said circular.

In the inspection of the books of accounts of IIFL, SEBI found that IIFL has misused the funds of its credit balance clients for settlement of its proprietary trades as well as the trades of its debit balance clients from April 2011 to June 2014 and the said violations were again noticed during March 2017 inspection for the period of FY 2015-16 and 2016-17.

According to SEBI, IIFL had misused client funds in the range of Rs 0.59 – 397.02 crore for settlement obligations of debit balance clients and Rs 0.26 – 73.28 crore for proprietary purposes. Additionally, the interest on funds misused by IIFL amounted to Rs 34.87 crore.

However, IIFL Securities said in an exchange filing that the order does not affect the company’s existing business with the existing clients, and the company is in the process of an appeal against the said order before the Securities Appellate Tribunal.