India’s securities regulator gave a JPMorgan Chase subsidiary the green light to resume trading after the firm paid up to settle allegations of market manipulation. The catch: it still can’t touch the specific trading mechanism it allegedly gamed.
The Securities and Exchange Board of India lifted its ban on Copthall Mauritius Investment Ltd. on September 9 after the firm deposited 29.6 million rupees, roughly $350,000, to cover what SEBI estimated as wrongful gains. Indian brokerage Mansi Share and Stock Broking, which was also implicated, chipped in approximately 7.2 million rupees. Combined, the two firms deposited around 36.8 million rupees (about $387,000) to comply with the regulator’s interim order.
What allegedly happened
The trouble traces back to August 13, when SEBI says both firms placed and then cancelled oversized orders during the Bombay Stock Exchange’s closing auction session. This mechanism, which had only launched ten days earlier on August 3, was designed to improve price determination for BSE Sensex constituents.
Copthall reportedly placed buy orders for 3.17 million shares and cancelled roughly a third of them. Mansi went even further on the sell side, placing orders for 1.28 million shares and cancelling nearly all of them. The strategy, according to SEBI, was to influence the closing prices of Sensex stocks in ways that benefited the firms’ existing options positions.
