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CS Professional · IFSCA - Regulations, Listing and Compliances · Capital Market Intermediaries

Kiran Brokers IFSC, a registered intermediary, discovers that one of its employees has breached a conduct provision and that the matter could be material to its registration. What is the most appropriate step consistent with its general obligations?

The firm should take corrective action and report or disclose the material matter to IFSCA as required, while cooperating with any inquiry. Concealment, private settlement or quiet dismissal fails the obligation of transparency and cooperation owed to the regulator by a registered intermediary.

  1. AWait to see whether IFSCA notices the breach during its next inspection
  2. BSettle with the affected client privately and take no further action
  3. CDismiss the employee quietly and treat the matter as closed
  4. DTake corrective action and report or disclose the matter to IFSCA as required, cooperating with any inquiryCorrect

Explanation

Intermediaries must be transparent with the regulator, inform it of material events and cooperate in inspections and inquiries. Concealing the breach, or resolving it privately, defeats this duty, and dismissal alone does not discharge the reporting obligation.

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